For The First Time Since The Financial Crisis GE Slashes Dividend In Half

Tyler Durden's picture

One months ago, we reported that according to option markets, GE - whose stock prices and operations have been in turmoil recently- was expected to massively slash its dividend, by just over 40%.

 

And in this case, the market was accurate, because on Monday Morning, (formerly) iconic blue chip General Electric announced a 50% cut to its quarterly dividend ahead of an update on strategy later on Monday by John Flannery, chairman and chief executive. The stock divdend payout will be slashed to 12 cents per share from 24 cents currently, the lowest quarterly dividend since 2010 and a rare reduction for the more than century-old company, and follows a sharp plunge in the company's cash flow generation.

Indicatively, the last time GE reduced its dividend was during the 2008-09 recession; in many ways today's cut is more painful to shareholders as it is not due to broader economic conditions, but due to company-specific factors. The decision comes after a painful year for the industrial conglomerate, which historically was one of the most reliable dividend payers in corporate America according to the FT.

Which is not to say that the dividend cut was a surprise: GE stock has fallen by a third since the end of December and it has underperformed one of its main rivals, Siemens.

The reaction on the news suggested that the market was bracing for even worse news: GE shares briefly erased pre-market gains, then shot up nearly 2% after the dividend cut. And while the kneejerk reaction is institutions covering, the fate of the stock now depends on retail investors many of whom held it for its generous, and now cut in half, dividend.

CEO John Flannery said: “We understand the importance of this decision to our shareowners and we have not made it lightly. We are focused on driving total shareholder return and believe this is the right decision to align our dividend payout to cash flow generation.”

He added that "the dividend remains an important component of GE’s capital allocation framework. With this action and others that we will be discussing this morning, we are acting with urgency to make GE simpler and stronger to drive growth and create more value for our shareowners.

Later on Monday, Flannery plans to disclose a roadmap for the company on Monday that will focus on three of its biggest business lines — aviation, power and health care, the Wall Street Journal reported, Reuters reported.

The report also says the plan stops short of a breakup or more radical restructuring of the 125-year-old company, but Flannery will look to exit most of its other operations. GE announced Monday it plans to slash its quarterly dividend by 50 percent to 12 cents a share from 24 cents a share. The Boston-based company also plans to shed its majority stake in Baker Hughes, which became a separate public company in July after merging with GE's oil and gas operations, the report said.

GE was reported to be laying off sales staff and other employees in its software division, according to sources, last week, ahead of Flannery's expected announcement on Monday of a plan to slash costs and jettison units in an effort to improve the company's profits.

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2banana's picture

GE used to be a company that made things with a small financial arm

Then it became a financial company that happened to make a few things

Then it went bankrupt and got a massive bailout from obama

And now it doesn't know what it is - but is trying to get back to making things (but not light bulbs or appliances anymore)

 

It will be dropped from the DOW sooner or later.

curbjob's picture

Fuck GE. 

For halving their dividend ,  I'm going to smash my GE coffemaker.

2banana's picture

Most likely - GE didn't make that coffeemaker.

GE sold their small appliance business about 20 years ago to the Chinese.  Part of the sale was the GE "meatball" logo trademark that they could still put on the small appliances.

eclectic syncretist's picture

The bureaucratic behemoth that is "General Monopoly" is getting the legs cut out from under it by direct suppliers....EOS

YUNOSELL's picture

Hopefully the major shareholder insiders were able to sell their shares before this news became public

jcaz's picture

Of course they cut the dividend- they need to make room for Flannery's golden parachute......

Never One Roach's picture

Remember when Soweeto Hussein bin Bama appointed Immelt as his "Job Czar" and Immelt immediately created jobs?

 

Sadly, Immelt created the jobs in China by closing down numerous plants here in the USA and within 6 months handed China over 25,000 jobs.

The job losses continued like a bloodbath for Hussein's entire 8 year Reign of Terror.

The Chinese, Mexican, Pakistan, Indian, Bangladesh, etc middle classes got wealthy while Obama threw Americans out of work by the millions.

 

You might say Obama, "fundamentally changed America" like he promised!

shitshitshit's picture

What's the common denominator between all these mega corporations that keep on losing money whereas their valuation keep on rising?

and BTW, who's buying at such prices?

Another example of closed circuit?

Never One Roach's picture

Target to close a dozen underperforming stores

https://www.msn.com/en-us/money/companies/target-to-close-a-dozen-underp...

yogibear's picture

GE has followed IBM in outsourcing to Bangalore India. Maybe TATA  can take over GE, since the goal of most CEOs these days is how fast they can increase their own net worth, by selling out the divisions. GE is becoming a shell of it's former self. Maybe the Chinese can buy the aircraft engine division. Flannery can buy a fortified island with all the proceeds from the sales and split up.

Buck Johnson's picture

"last time GE reduced its dividend was during the 2008-09 recession".  It seems like we are getting closer to the plug being pulled aren't we.

 

Erek's picture

That's a good one "General Electric pulling the plug"!

Offthebeach's picture

Back in the day, Bethlehem Steel built a skyscrapper and complex for its self.  Fini.  Ditto GM with its non Renaissance Center.  Anyone remember the Pam Am building?  Now Apple has its building statement, the Donut.  GE bailed on Fairfield ( nice town ) and to Boston, occupying once productive haunts of fishing trawlers, warfs, yards with higher paying rent seeking cuck snowflakes.

spanish inquisition's picture

Many times a top is signaled, once a company builds a monument to itself .

Offthebeach's picture

Pentagon.

Capital remodel. 

If the NFL keeps Roger Goodell. 

stecha's picture

GE is the premium brand of chevrolet,they both suck equally and are the most corrupt in the US. Ooops i forgot, elon musk is most corrupt. god save the aww frug it nvm..

lester1's picture

The real economy fucking sucks and most corporations are cooking the books. SEC takes kick backs and looks the other way!

jamesmmu's picture
Credit check, Commercial real estate index, Unemployment, Margin debt

http://investmentwatchblog.com/credit-check-commercial-real-estate-index...

overmedicatedundersexed's picture

old ju ceo, played politics with obuma, while ge burned..oh he got paid well and a golden parachute to boot..so he did well..workers and share holders, too fukin bad.

claw backs are outta style

Dilluminati's picture

I cannot remember the last time I purchased something that GE made?  So if they 1/2 their dividend I suggest that investors tighten their belts.  Oh BTW tax exempt NFL Roger Goodell reportedly requests $50 million salary, lifetime private jet in contract talks.   While these two don't seem connected they are, look at the animal farm manner in which wealth is distributed and you see the problem with poor performers.  Finally 3 players took a knee this week, those players came from SF and NYG, two worse team records in the NFC.  

So what does all of this mean?

Ergo They're cocksucker!

JoeTurner's picture

Hard to pay dividends in a perpetual global depression...we need MOAR WARS !

overmedicatedundersexed's picture

on Trump's china trip..where was GE with the other ceo's who got big deals with china?? Trump sees GE as a big hillary supporter, so they get Nothing.

waiting for tax plan to fuk the high tax dem run states..make em pay Don. MAGA

SummerSausage's picture

Don't you remember when Immelt was the chairman of Obama's jobs council? He closed GE's manufacturing plants in the US and moved production of lightbulbs and wind turbines to China although he took hundreds of millions in US grant money for renewable energy projects.

ToSoft4Truth's picture

The nice Millennials running GE must be protecting their pensioners. 

backwaterdogs's picture

I started on zh years ago for financial insight, at the time thought there were a lot of bright insightful minds.

In fortunately I listened and have been out of the market and missed a lot if gains.

I've been watching ge for an entry expecting this cut to drop the stock back in the teens...but will rebound in this news.

Only one thing is clear, 80% of commenters on zh anymore are fucking morons...and yes I consider myself in the reamining 20%

Umh's picture

I might dispute the 80 20 ratio, but those with the least knowledge do seem to be confident of their opinions.

overmedicatedundersexed's picture

high praise indeed for the 20% coming from the likes of you.

Peter Royce Clayon da Turd's picture

Unfortunately, ZH has become the economic meeting place for Storm Front members. Still read the sites stories, but only read the comments when I'm due for a laugh. My ratio is a bit more tame, 60-40 in favor of ignorant, uneducated white sheet dressed homos. Shame because I agree with most of ZH articles and their point of view, but it attracts simpletons who only see black and white. They will be the first to be disposed of when the Shi'ite hits the fan.

brushhog's picture

Yes but our sheets are made overseas, which makes us globalists.

silverer's picture

Nobody I know can see the future date of a crash to the day, or even the week, although a handful of people surely predicted the last one, and they were laughed at during that time. They just saw it too far out. What I understand about it, is that the best minds in finance are working 24/7 to continue the Ponzi. They are more creative than many thought. They are working hard to dig the hole deeper, and to make this crash historic by putting it farther into the future. You have to admire their doggedness and dedication to making things worse. Don't measure your success in life by financial gains. That's become the biggest weakness of Americans.

One economist, Peter Schiff, calls the last one. The same conditions exist today.

https://www.youtube.com/watch?v=LfascZSTU4o

how_this_stuff_works's picture

"I started on zh years ago for financial insight, at the time thought there were a lot of bright insightful minds.

"In fortunately I listened and have been out of the market and missed a lot if gains."

Don't feel too bad. I took myself out of the stock market in 1993. Didn't see how things didn't unwind then and didn't understand how manipulative things could get. In '96, .gov took me out of bonds when it called them.

If the markets had been left to the natural corrective mechanisms, it'd all be different now.

God help us when this thing finally blows up.

Edit: One of my friends related her 20 (or 21) year old son, who works at Wendy's and lives in her house, went to sign up for Medicaid. Turns out he'll also receive $100 a month EBT. I guess it never occurred to him to get a second job or one with more hours.

My friend plans on buying the Thanksgiving turkey with that money.

Picture me banging my head on the wall.

RafterManFMJ's picture

Good for him.

You either suck off the pig, or the pig eats you. He needs to get that sweet sweet EBT while he can!

Offthebeach's picture

Just think of the kid as a one man corporation, farming federal rent seeking subsidies like any Fortune 500, Bob Kraft, any and all wealthy, Doctors, Elon Musk, unions, academe.....

Why should he be different?  It's a brave new world order.

Sphira's picture

You are correct...80% and rising.

Also correct is @how_this_stuff_works : " with natural corrective mechanisms "

On a long enough timeline ZH will be correct too.

GE bottomed out in the 2nd quarter 09' at...get this $6.66. GE is of the devil ...Bobby Boucher ...for those that attach significance to numerology....

And like any social media site ZH is infected with shills spooks and foul mouthed imbeciles. Along with the usual goal of polarization and dumbing down the population, this also generates traffic and comment participation ....all the better to database you my dear. For marketing internal; or various other. ---- external purposes.

Freddie's picture

You are thinking GE might rebound after the dividend cut and you are calling 80% of the posters here morons?  LOL!

Also blaming ZH posters because you stayed out of the market?

Buying a stock after the dividend cut can be a decent strategy if the company is not fundamentally flawed.  GE is flawed.  I talked to HQ real estate area years ago about a industrial diamonds/abrasives division building they were selling.  The exec I talked to sounded like a hit man for the Bonnano family.  Upstate GE and IBM have always reminded me of Mafia style companies without the wise guys "charm."  Real scum. Go look at GE's balance sheet and income statement,  GE's best engineering these days are their financial statements.

Thanks to ZH or another site years ago, we were informaed that GE CDS or credit default swaps were predicting default and Uncle Scholomo's boy Obola back stopped all their debt.  GE is a Deep State MIC shit company.

As far as you missing the mkt's gains.  Use some common sense instead of calling 80% of the people here morons.

The US and US dollar are dying.  The stock market is going up due to Rothschild Fed Reserve fiat bucks and the dollar aka petro dollar dying.  Putin offered to be a partner but has been routinely been slapped in the face by NeoCons.  Russia, China and others are sick of the petrodollar being used to bully and attack other countries while threatening Russia.

They have moved on with Silk Road, One Belt, etc which will kill the dollar even faster.  the elites and NeoCons in DC, NYC, etc are looting America as fast as they can.  The stock markets of venzuela and Zimbabwe did great as their currency became worthless.

I suggested you double down on that GE buy.  

Offthebeach's picture

"...20 trillion credit, is a hell of of a drug.."

how_this_stuff_works's picture

"The US and US dollar are dying. "

And therein lies the real problem, the elephant in the room.

What happens when our currency is no longer accepted? It must be an inconceivable thought to our politicians, what what USA being so "exceptional" and all.

It will, in my late father's words, make the Great Depression of 1929 look like a cake walk.

And there are no guarantees. Just ask the (former) bondholders of the "old" GM. Ask the pensioners whose futures were defaulted to the PBGC. This thing breaks, no one will be spared from the pain.

Zorba's idea's picture

Comments cogent up till the "Buy" suggestion. This POS company is retracing all the way to its $6 per share bottom as the US economy incentivizes all the GE Sigma 6er's to screw its shareholders, vendors, and (((valued))) employees up the wazoo. Hilarious that its Corporate slogan for rallying its employees is "We're ALL IN!" This Corporate Fascist regime would make the Boys from Brazil blush. 

Zorba's idea's picture

I get your point to a degree...ZH articles vary from the Good, the Bad, and the Ugly, post collapse of our rigged financial institutions...the doom porn ZH churns out have to be taken for what it is, lots of back office BS all the while ignoring the FED of all things. Follow the FED's imperatives...PRINT=Risk On...No PRINT=Risk Off

Werekoala's picture

Maybe the smart, empowered womyn engineer who totally, like, improved that engine in their commercials can fix this too.

yogibear's picture

H

Cook your books, buyback shares, the ccash-outand leave. Brilliant plan Imelt.

Robert Trip's picture

"We understand we are fucking the shareholder but management bonuses and incentives along with stock options will remain intact."

silverer's picture

Stealing from the people that made them great. No so great anymore.

stinkhammer's picture

pay some taxes you fuckfaces