General Electric, whose once-generous dividend was a reliable payout to average investors for decades, is slashing its dividend from 12 cents to one penny, the company announced Tuesday.
The industrial giant said it is taking a $22 billion impairment charge for its power division, which is a crucial segment of its operations going forward. GE plans to split its power division in two, part of new CEO H. Lawrence Culp Jr.'s efforts to revive the troubled company.
Executives also disclosed that the Justice Department and the Securities and Exchange Commission are investigating its accounting practices.
GE, which has famously paid a dividend every year since the Great Depression, said the cut to its quarterly payout will save $3.9 billion in cash annually. Culp, who stepped into the CEO role earlier this month, is known as a specialist in turning around companies. GE is struggling to right itself after warning of cash flow and profit growth shortfalls, citing the weak performance of its power division.
"My priorities in my first 100 days are positioning our businesses to win, starting with [GE] Power, and accelerating deleveraging," Culp said in a statement. "We are moving with speed to improve our financial position, starting with the actions announced today."
GE's dividend was as high as 31 cents a share less than a decade ago. At the turn of the 21st century, the conglomerate was the world's most valuable public company, and its stock was once seen as a safe bet for millions of Main Street investors. GE shares have plunged 36 percent this year.
The company swung to a third-quarter loss of almost $22.8 billion Tuesday, or $2.62 per share. Earnings, adjusted for one-time gains and costs, came to 14 cents per share, 7 cents short of Wall Street expectations, according to a survey by Zacks Investment Research. GE posted revenue of $29.57 billion in the period, a little short of projections.
GE's chief financial officer said on a conference call Tuesday morning that the Department of Justice has opened a probe into a $22 billion charge taken in the third quarter for acquisitions in its power business. CFO Jamie Miller also said the Securities and Exchange Commission is expanding an ongoing probe to look at the same issue.
"The Department of Justice is also investigating this charge and the other areas that we have previously reported are part of the SEC's investigation," Miller said on a conference call to discuss results. "We are cooperating with the SEC and DOJ as they continue their work on these matters."
-- Rachel Layne contributed to this report.