GE is heavily slashing its dividends, the company said Tuesday as it announced a $22.8 billion loss for the third quarter.
That loss can be attributed to the $23 billion writedown of GE Power that took place earlier this month, when the ailing conglomerate defenestrated CEO and chairman John Flannery, little more than a year after he took the reins.
Flannery’s replacement, Lawrence Culp, used Tuesday’s earnings release to outline his first steps for turning GE around.
First, there’s that dividend cut, from $0.12 to $0.01 per share, which will take place in December. GE said this will let it hang on to around $3.9 billion in cash per year.
The second change is the reorganization of GE Power, which has been floored by weak demand for its fossil-fuel-oriented products. The unit will be split in two: one for gas products and services, and the other for everything else, such as steam, nuclear, grids and power conversion.
“We will heighten our sense of urgency and increase accountability across the organization to deliver better results,” said Culp in a statement. “We are on the right path to create a more focused portfolio and strengthen our balance sheet. My priorities in my first 100 days are positioning our businesses to win, starting with Power, and accelerating deleveraging.”
GE’s adjusted third-quarter earnings of $0.14 per share missed Wall Street forecasts by $0.06. Revenue came in below expectations too, at $29.57 billion for the quarter.
However, GE’s shares went up 1.7% in premarket trading, following the results and Culp’s outlining of his plans.
GE last cut its dividends in November last year, halving them; previous cuts took place during the financial crisis and the Great Depression. Last year’s cut helped to knock more than 7% off GE’s share price.