By Alwyn Scott and Rachit Vats
(Reuters) – General Electric (NYSE:GE) Co slashed its quarterly dividend to a penny a share, promised to restructure its power unit and said it faced a deeper accounting probe as new Chief Executive Larry Culp took his first steps to revive the struggling conglomerate.
GE said the U.S. Securities and Exchange Commission and Department of Justice had expanded ongoing investigations to include a $22-billion writedown of goodwill from GE’s power division, which GE reported on Tuesday.
GE’s restructuring of Power comes as the 126-year-old company, once the most valuable U.S. corporation, is reeling from missteps that have eroded profits and forced it to announce more than $40 billion in writedowns in less than a year, among the largest such actions in U.S. corporate history.
Culp, who took over on Oct. 1, delivered more bad news on Tuesday: GE will significantly miss its full-year cash flow target of about $6 billion, and cannot estimate profits for the year until Culp gets more detail about its ailing power unit.
GE all but eliminated its quarterly dividend of 12 cents a share to conserve $3.9 billion in cash. Analysts viewed that positively, and Culp said there were no plans to raise equity capital, as some analysts had feared.