General Electric is slashing its coveted stock dividend in half and shrinking itself further by selling storied businesses such as its railroad and light bulb units.
The dividend cut, only GE’s second since the Great Depression, shows the depths of the iconic company’s financial problems.
GE ( is one of America’s most widely held stocks, and countless shareholders, including retirees, rely on the dividend payments. But the company is under enormous pressure to restore investor confidence. The stock has lost a third of its value this year. )
The company also cut its dividend in 2009, during the Great Recession. But dividend cuts are rare these days. Many companies are increasing them because the U.S. economy is healthy and the stock market is booming.
GE also unveiled plans to shrink its board of directors from 18 members to a dozen next year. The new board will also include a committee focused on how GE spends its money.
The company plans to get rid of $20 billion worth of businesses in the next year or two, including the transportation division, which houses the century-old railroad business. Among other units on the chopping block, GE reiterated a desire to sell the light bulb business that has symbolized the company for 125 years.
John Flannery, GE’s new CEO, told investors during a presentation that the company is considering “exit options” for Baker Hughes (. Baker Hughes is majority-owned by GE and was only formed last year by combining the two companies’ oil and gas businesses. )
It has already gotten rid of its real estate portfolio, its dishwasher and appliance business, and media properties NBC and Universal Studios. More recently, it unloaded its water business and a unit that makes electrical equipment for utilities.
All this is part of GE’s mission to focus on being a modern industrial company that sells things like jet engines, power plants and MRI machines.
GE confirmed on Friday that job cuts, some of which have begun, are part of a previously announced plan to cut costs by $3 billion.
CNNMoney (New York) First published November 13, 2017: 6:47 AM ET