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General Electric (GE) missed its revenue target in its third quarter (Q3) earnings report. The company has struggled to overcome its recent years of economic woes. When the news first hit shareholders, the corporation's stock price dropped down to its lowest point in a year.
GE’s revenue troubles
GE’s revenue in Q3 fell by 4% to $29.57 billion and reported a $22.8 billion loss, disappointing analysts. The company struggled began when it changed its focus over the last few years to create fossil fuel plants. However, with the decline in natural gas use and increase in solar power worldwide, the corporation has seen a drop in profits.
GE will try to free up cash flow by cutting its quarterly dividend to a penny a share. The reduction could raise $3.9 billion for the conglomerate. While some financial experts agree that the company’s payout should be decreased, some feel that the action will hurt stockholders.
‘Although I agree with the decision to eliminate the dividend because they certainly need that extra cash for restructuring and dealing with liabilities like a dramatically underfunded pension, this is going to be painful for those individual shareholders who live on their dividend,’ said Jack Degan, GE shareholder and chief investment officer at Harbor Advisory.
New chief wants to help GE through asset sales
Chief executive officer (CEO), Larry Culp, took over GE in early October. He already has a lot of work to do to lift the conglomerate out of its financial downturn. Culp noted that he will make improvements to the company’s bottom line.
‘My priorities in my first 100 days are positioning our businesses to win, starting with power, and accelerating deleveraging,’ said Culp while addressing shareholders.
'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, added Culp.
GE will try to boost its sagging power business by dividing it into two units. One unit will house the company’s gas products. The second will have the corporation’s nuclear and power division.
Culp also noted that he will use asset sales to raise money for GE and reduce leverage.