Janina Lim – Fourth Estate Contributor
Boston, MA, United States (4E) – General Electric Co said it will slash its quarterly dividend in half, as part of an overhaul of the company’s strategic structure.
GE said it would cut the dividend to 12 cents per share from 24 cents, starting in December, a move expected to be implemented later in the day.
This marks the firm’s third time in its 125 years of operations to reduce its dividend. The other two cuts were implemented during the Great Depression and the 2009 financial crisis.
The move, widely expected after GE’s cash flow deteriorated this year, is expected to save about $4 billion in cash annually.
Shares of GE traded upward 2.3 percent at $20.96 in premarket trading. The stock has landed as the worst performing company at the Dow Jones Industrial Average this year, slumping by as much as 35 percent through Friday’s close.
“We are focused on driving total shareholder return and believe this is the right decision to align our dividend payout to cash flow generation,” the firm’s new Chief Executive John Flannery was quoted in a statement.
A Wall Street Journal reported earlier in the day, which quoted a person familiar with the matter who spoke on condition of anonymity, said Flannery plans to reveal a roadmap for the company on Monday which will focus on three of its biggest business lines – aviation, power and healthcare while departing from most of its other operations.
Such a move to isolate GE to just three main industries would reverse the previous decades-long multi-billion approach that placed the frim with sprawling interests across media, energy, banking, aviation, railroads, marine engines and chemicals
The move to establish GE as a conglomerate was part of former CEOs Jeff Immelt’s plant to revamp it as a “digital industrial” company that builds software to manage and optimize its jet engines, power plants, locomotives and other products.
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