by: Jayson Derrick, Benzinga Staff Writer
What You Need To Know
General Electric will be slashing its dividend payout by 50 percent from 24 cents per share quarterly to 12 cents per share quarterly, the company said.
The company also guided its full year fiscal 2017 adjusted earnings per share to be $1.07, which is 7 cents short of what analysts were expecting. General Electric also guided its free cash flow to a range of $6 billion to $7 billion. By comparison, $8 billion is required to fulfill its dividend payment prior to the cut.
Here is a summary of some of the other updates:
- A reduction in number of seats on its board of directors.
- A revised focus on aviation, power and health-care businesses.
- A pull back on the transportation unit and GE Lighting.
- A commitment to eventually get rid of its 63 percent stake of Baker Hughes.
- A commitment to streamline the company's entire corporate function.
- A pledge to cut an additional $1 billion in annual spending on top of $2 billion in cost savings by the end of 2018.
Why It's Important
General Electric's dividend slash represents the first reduction in its payout since 2009 and only the third time in its entire 125-year old history.
GE CEO John Flannery said the company is "acting with urgency to make GE simpler and stronger to drive growth and create move value for our shareowners." Shortly after Monday's market open, the stock was trading down about 3 percent at $19.93.
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