BOSTON (AP) — General Electric slashed its quarterly dividend and announced it would split its power business into two separate divisions.
The industrial conglomerate took a $22 billion charge in its power division and swung to a third-quarter loss that was bigger than most industry analysts had expected.
The restructuring of the power business will include a gas-focused division that combines its gas product and services groups. The second unit will include steam, grid solutions, nuclear and power conversion.
The company on Tuesday cut its dividend to a penny, from 12 cents per share. A large proportion of GE shares are held by individuals, who appeared to overlook that news early Tuesday in hopes that the worst may be behind the company.
GE this month ousted CEO John Flannery after only about a year on the job, replacing him with Larry Culp, a highly regarded executive who last led Danaher Corp.
Culp said, “After my first few weeks on the job, it’s clear to me that GE is a fundamentally strong company with a talented team and great technology. However, our results are far from our full potential. We will heighten our sense of urgency and increase accountability across the organization to deliver better results.
“We are on the right path to create a more focused portfolio and strengthen our balance sheet. My priorities in my first 100 days are positioning our businesses to win, starting with Power, and accelerating deleveraging. We are moving with speed to improve our financial position, starting with the actions announced today. I look forward to updating you further on our progress in early 2019.”
The reduced dividend will allow GE to keep about $3.9 billion in cash each year, it said Tuesday. GE had been paying a dividend of 12 cents since December 2017, when it was cut from 24 cents, according to FactSet. Before that, former CEO Jeffrey Immelt cut the dividend from 31 cents to 10 cents in 2009, which was the first time the company cut the dividend in decades.
For the period ended Sept. 30, GE lost $22.8 million, or $2.63 per share. A year earlier the Boston company earned $1.3 million, or 16 cents per share.
Excluding the $22 million charge tied to its power business and other items, earnings were 14 cents per share, which was 7 cents short of expectations, according to a survey by Zacks Investment Research.
Revenue declined to $29.57 billion from $30.66 billion, which was also short of expectations.
GE is facing a series of investigations and was removed from the Dow Jones industrial average in June. The Securities and Exchange Commission is looking into how GE took a $15 billion hit after a subsidiary, North American Life & Health, miscalculated how much it would cost to pay for the care of people who lived longer than projected.
GE also said in February that the Justice Department may take action in connection to an investigation into the company’s subprime mortgage loans business.
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Part of this story was generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on GE at https://www.zacks.com/ap/GE
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