GE’s slimming down just in time for Thanksgiving, as CEO John Flannery announced the industrial giant will halve its dividend from 24¢ a share to 12¢. The $4 billion saved is part and parcel of a broader strategy to cut costs and focus on three core businesses: aviation, power, and health care.
But for all the wrong reasons. GE already holds the gold medal for largest dividend cut ever in 2009 ($8.9 billion). Its only other dividend cut? During the Great Depression…we’ll let you connect the dots there. Not a great sign when you’re running out of money and the economy isn’t experiencing a once-in-a-generation financial crisis.
Just how desperate is GE right now? Well, it’s one of only ten companies in the S&P to decrease its payout to shareholders this year, while 310 have boosted dividends. And (GE investors: now’s the time to stop reading) as the S&P surged 16% YTD, investors made like Warren Buffett, dropping GE’s stock 40%. It’s the Dow’s worst performer by a country mile.
Reducing a significant portion (possibly a third) of the company’s 300,000-person workforce.
Shrinking the size of the board from 18 to 12.
Selling $20 billion worth of assets, including a 63% stake in Baker Hughes, a $40 billion company satisfying all your oil drilling needs.
Offloading its transportation and lighting businesses (the latter established by a guy named Thomas Edison).
Yesterday wasn’t the proudest moment for the 125-year-old American icon. But sometimes you just gotta rip off the Band-Aid.