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General Electric Slashes Dividend and Shrinks Board Amid Overhaul Plans

12:10 PM, Nov 13, 2017 — General Electric (GE) slashed its dividend by half and plans to cut the size of its board of directors as it set earnings expectations for 2018 below analysts’ expectations and said the year will be a “reset and stabilize” period.

The Boston-based industrial giant said it was cutting its quarterly dividend to a payout of $0.12 from $0.24 previously, effective likely next month.

“We understand the importance of this decision to our shareowners and we have not made it lightly,” John Flannery, who was named chief executive of the firm in June, said in a statement Monday. “We are focused on driving total shareholder return and believe this is the right decision to align our dividend payout to cash flow generation.”

In a presentation released to accompany an investor update that took place later in the morning, GE said it was cutting the size of its board from 18 to 12 directors who will be nominated at the general meeting in April next year. They will have a 15-year term limit, the company said.

GE also said it’s exiting $20 billion in assets and plans to reduce volatility and commodity exposure by looking at “optionality” for its oil services unit Baker Hughes (BHGE) to make a “simpler, more focused” GE company.

GE sees 2017 adjusted earnings per share in a range of $1.04 to $1.12, compared with the Street’s view for $1.07, and its outlook for 2018 is in a range between $1 and $1.07 a share, which is beneath analysts’ expectations, for $1.14 a share.

In 2019, GE is looking for continued growth in healthcare, the start of a rebound in transportation, stabilization in power and continued trends in aviation. GE will take a “highly disciplined” approach to mergers and acquisitions and make improving free cash flow across all businesses a priority.

Companies: General Electric Company
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