GE, in conjunction with reporting a third-quarter loss of $2.63 a share, revealed that it is slashing its quarterly dividend, is reorganizing its Power unit and is the subject of a Department of Justice inquiry into accounting at the conglomerate.
In a press release, GE said it is cutting its quarterly dividend to $0.01 a share from $0.12 a share beginning with the next dividend declaration, which is expected to occur in December of this year. With the change, GE will be able to retain $3.9 billion in cash per year compared to the previous payout level.
The company also said it would reorganize its Power unit to accelerate the business’ operating and financial improvements. GE will create two units: a unified Gas business that will combine GE’s gas products and services groups, and a second unit constituting the portfolio of GE Power’s other assets, including Steam, Grid Solutions, Nuclear and Power Conversion. GE also said it intends to consolidate Power’s headquarters structure to ensure the units can best serve their customers.
“After my first few weeks on the job, it’s clear to me that GE is a fundamentally strong company with a talented team and great technology. However, our results are far from our full potential. We will heighten our sense of urgency and increase accountability across the organization to deliver better results,” said GE Chairman and CEO H. Lawrence Culp, Jr. in the press release. “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. We are moving with speed to improve our financial position, starting with the actions announced today. I look forward to updating you further on our progress in early 2019.”
Separately, The Wall Street Journal reported that the Department of Justice is investigating the company’s recent accounting practices. The inquiry is happening at the same time that a Securities and Exchange Commission investigation into GE has been underway. Both government agencies are looking into a $22 billion charge GE booked in the third quarter that has to do with its acquisitions in the Power unit, as well as a $6 billion charge in the first quarter due to a shortfall in insurance reverses, GE’s CFO Jamie Miller told investors on a conference call Tuesday.