G.E. Slashes Dividend By Almost 70% Last Trade: 9.11
General Electric Slashes Dividend 68%, to 10 Cents
GENERAL ELECTRIC, GE, DIVIDEND, ECONOMY
General Electric plans to slash its quarterly dividend 68 percent, to 10 cents from 31 cents a share, beginning in the third quarter.
The move, which will save $9 billion annually, had been widely expected in recent weeks as the company coped with falling profits.
GE’s shares tumbled in reaction to the news.
As recently as January, GE CEO Jeffrey Immelt, told CNBC that he had no plans to cut the dividend.
“I think the tangible facts of what we’ve done here I think should let investors know that we’ve got the cash and the operating model that’s going to secure the dividend in this environment,” he said.
But earlier this month, GE said it would evaluate its planned second-half dividend, leaving open a possibility that it would reduce the quarterly payout.
GE shares have lost almost 70 percent of their value over the past year amid investor concerns over the effect of the credit crunch on GE Capital, GE’s financial unit.
Ratings agencies Moody’s Investors Service and Standard & Poor’s are reviewing their ratings of GE. Many analysts suspect the company will lose its “AAA” rating, largely due to the problems at GE Capital.
GE, which makes everything from locomotives to household appliances and is regarded as an economic bellwether, has been working to reduce its dependence on its GE Capital though efforts to sell off parts of that portfolio have proved unsuccessful during the credit crunch.
GE is the parent company of CNBC.
—Reuters contributed to this report.
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