GE slashes dividend, takes $22 billion charge in 3Q

GE slashes dividend, takes $22 billion charge in 3Q

GE slashes dividend, takes $22 billion charge in 3Q

GE Aviation, one of the bright spots for the company, boosted sales 12 per cent as it rolls out a new engine for narrow-body commercial jets.

GE has had a history of big dividend cuts over the past decade. Also on Tuesday, the company formally announced a charge of US$22-billion related to acquisitions in its power business - a goodwill writedown it had warned was coming when Mr. Culp was named CEO on October 1. Patience Wanes Culp said the company is "moving with speed to improve our financial position" and plans to continue with a strategy to shed the Oil & Gas unit and health-care business. The company will also take a pretax $22 billion noncash goodwill impairment charge related to GE Power and split the unit in two - a unified Gas business and a second unit made up of the portfolio of GE Power's steam, grid solutions, nuclear, and power conversion assets.

Miller on Tuesday morning disclosed that the U.S. Securities and Exchange Commission has expanded its investigation into that charge, and the U.S. Department of Justice has begun an investigation of its own.

But Culp, who faced analysts for the first time since replacing former CEO John Flannery on October 1, said that GE has no plans to tap more cash through an equity raise. The 126-year-old conglomerate was once the most valuable USA corporation but has slimmed down to focus on jet engines, power plants and renewable energy.

The announcements came as Culp and GE Chief Financial Officer Jamie Miller discussed the firm's third-quarter earnings report, much of it again centered on Power and its struggles.

GE did not cut its earnings forecast for the year from the most recent $1.00 to $1.07 per share, as some had expected. Most of the other top-10 S&P 500 dividend cuts involved banks.

Woman charged after 3 siblings struck and killed while boarding school bus
Just last week, a 16-year-old Decatur High School student was hit when a vehicle drove around the school bus he was boarding. Tuesday when they were hit by the pickup truck on a two-lane road near Rochester, about 100 miles north of Indianapolis.

Howard Silverblatt, analyst at S&P Dow Jones Indices, estimates that the dividend change will amount to an annual cut of around $4.2 billion, which would make it the 8th largest dividend cut in index history. A year earlier the Boston company earned $1.3 million, or 16 cents per share.

Debt investors at first applauded the dividend cut, expecting that the US$3.9 billion it would save could help pay down about US$115 billion in debt.

"Going forward, we will target a dividend payout ratio in line with peers, over time", Culp said.

Culp acknowledged that the overall picture was not rosy, saying, "The company perhaps doesn't enjoy the reputation in certain quarters it once did".

Shares were up more than 2%.

"I think part of what we need to do at Power is wring out a little bit of the undue optimism ... so that we can establish a baseline that we can build on".

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