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Power's Out: General Electric (GE) Slashes Dividend, Again
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It seems as though over the past year, General Electric (GE - Free Report) has fallen at a very steadfast pace. After slashing their dividend in November 2017 from 24 cents to 12 cents, getting kicked off the Dow in 2018, and replacing their CEO, GE has fused out. The company has been in a downwards spiral and has only gotten worse after their recent announcement. In order to save nearly $4 billion in cash so they can keep the company alive, GE announced that it would slash its dividend from 12 cents to just 1 cent, a penny. GE has been facing trouble throughout this past year, with the biggest problem being that they are running out of excess capital for operating and other expenses for the company. According to Forbes, GE recorded a $22 billion impairment on its power business, which has cost the company $30 billion in losses over the past four quarters.
Shares closed down over 8% Tuesday on the news, and at one point, the stock fell below $10 a share. GE has plunged more than 40% since January.
What’s Next for GE?
In GE’s quarterly report, we saw weaker-than-expected earnings, hence the company taking immediate action. The company has lost a lot of profit particularly due to its power sector, and saw a decline of almost 33%. Therefore, CEO Lawrence Culp announced that it would split the company into two different sectors: one that focuses on gas operations and the other on nuclear, steam, grid and power conversion.
It was necessary for GE to cut its dividend again in order to save the company and maybe have the slightest chance to turn it around and regain its power. If the company would have kept the dividend as it was, they would continue to lose money to its investors and eventually would not have enough money to run on.
However, what does this mean for GE’s investors? Obviously, this means that there will be less investors to the company, as they will not be receiving the same amount of shares they were before. Investors look to invest in companies that have a high dividend so in return, they get what they wanted from the company.
Although investors might be unhappy, Culp’s main priority at this point is focusing on positioning the business to win and that means starting with the Power sector first. It seems fitting that Culp wants to put his company first seeing the turmoil they are in at the moment.
Outlook
After cutting its dividend, it will be very important that the company does make changes in any effort to change the future and outcome of the company. As of right now, it seems as though investors are backing away and this could hurt GE if things don’t get better quickly.
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Power's Out: General Electric (GE) Slashes Dividend, Again
It seems as though over the past year, General Electric (GE - Free Report) has fallen at a very steadfast pace. After slashing their dividend in November 2017 from 24 cents to 12 cents, getting kicked off the Dow in 2018, and replacing their CEO, GE has fused out. The company has been in a downwards spiral and has only gotten worse after their recent announcement. In order to save nearly $4 billion in cash so they can keep the company alive, GE announced that it would slash its dividend from 12 cents to just 1 cent, a penny. GE has been facing trouble throughout this past year, with the biggest problem being that they are running out of excess capital for operating and other expenses for the company. According to Forbes, GE recorded a $22 billion impairment on its power business, which has cost the company $30 billion in losses over the past four quarters.
Shares closed down over 8% Tuesday on the news, and at one point, the stock fell below $10 a share. GE has plunged more than 40% since January.
What’s Next for GE?
In GE’s quarterly report, we saw weaker-than-expected earnings, hence the company taking immediate action. The company has lost a lot of profit particularly due to its power sector, and saw a decline of almost 33%. Therefore, CEO Lawrence Culp announced that it would split the company into two different sectors: one that focuses on gas operations and the other on nuclear, steam, grid and power conversion.
It was necessary for GE to cut its dividend again in order to save the company and maybe have the slightest chance to turn it around and regain its power. If the company would have kept the dividend as it was, they would continue to lose money to its investors and eventually would not have enough money to run on.
However, what does this mean for GE’s investors? Obviously, this means that there will be less investors to the company, as they will not be receiving the same amount of shares they were before. Investors look to invest in companies that have a high dividend so in return, they get what they wanted from the company.
Although investors might be unhappy, Culp’s main priority at this point is focusing on positioning the business to win and that means starting with the Power sector first. It seems fitting that Culp wants to put his company first seeing the turmoil they are in at the moment.
Outlook
After cutting its dividend, it will be very important that the company does make changes in any effort to change the future and outcome of the company. As of right now, it seems as though investors are backing away and this could hurt GE if things don’t get better quickly.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early. See Zacks' 3 Best Stocks to Play This Trend >>