General Electric (NYSE: GE) slashed its quarterly dividend Tuesday to just a penny a share starting in 2019, the second dividend cut in a year and a dramatic move by new Chairman and CEO Larry Culp to free up cash for the beleaguered blue chip once treasured by its longtime shareholders for its hefty payout.
The dividend cut came as GE reported adjusted third-quarter earnings of 14 cents a share, six cents below Wall Street forecasts. Revenue for the quarter fell 4% to $29.57 billion, also less than expected. On a GAAP basis, the company lost $2.63 a share in the quarter.
The company also said it will divide its ailing power business into two units. It took a $22 billion non-cash charge in the third-quarter related to the business.
Appointed on Oct. 1, Culp was brought in after former CEO John Flannery frustrated the GE board with his slow pace of change. GE announced Oct. 12 it would delay its third-quarter report by five days to give Culp a full month to catch up.
Culp came in as GE expected to fall short of its previous guidance for both earnings and free cash flow in 2018.
The industrial conglomerate, one of the original stocks listed on the Dow Jones Industrials, expects to retain about $3.9 billion in cash a year as a result of the dividend cut. GE shares were up Tuesday by nine cents to $11.25. The stock on Monday fell as low as $10.93, its lowest in nine years.
