Shares of General Electric Company (NYSE:GE) were down about 10% by 2:30 p.m. EDT on Tuesday after the industrial giant reported disappointing third-quarter results and slashed its dividend again. With today's sell-off, GE's stock has plummeted to levels not seen since 2009.
General Electric's struggles continued during the third quarter as the company's beleaguered power business disappointed once again. Revenue from that segment plunged 33% year over year, which caused that business unit to report a loss. That weighed on GE's overall profitability -- which, after adjustments, was $0.14 per share for the quarter, missing analysts' expectations by $0.06.
The company said that it plans several steps to right the ship. First, in a widely anticipated move, it will slash its dividend from $0.12 per share on a quarterly basis down to a mere $0.01 each quarter. That will preserve $3.9 billion in annual cash flow, which the company intends on using to accelerate its deleveraging.
In addition, the company said that it would reorganize its GE Power business into two units to improve its cost structure, enhance its agility, and drive better outcomes. That restructuring is part of newly installed CEO Lawrence Culp's plan to move with heightened urgency to improve the company's financial position while repositioning the business to deliver better results.
While GE unveiled several steps to address its balance-sheet issues and power division woes, investors want to see results. It will likely be quite some time before that happens given the comments by CFO Jamie Miller on the accompanying conference call when she stated that the issues hampering the power business "will persist longer and with deeper impact" than the company initially anticipated. Until that business starts turning around, the company's stock price will likely remain under pressure.