GE Shareholders Cheered by Dividends, Earnings News

General Electric Co. (GE) shareholders heaved a sigh of relief after the company said it would maintain its annual dividend and forecast fourth-quarter profit in line with average analysts’ estimate. There were widespread fears on Wall Street that GE would either scrap dividend payments or lower its outlook.

GE now sees earnings of 50 to 52 cents a share in the fourth quarter, which is at the lower end of its prior view of 50 to 56 cents. The company also said it was taking steps to reinforce its finance arm, GE Capital, though the restructuring efforts could lead to a charge of about $1 billion to $1.4 billion. However, even after recording the charge, the unit could yield $8 billion this year.

GE also reaffirmed plans to maintain its current annual dividend of $1.24 per share through 2009. The company has consistently raised its dividend in at least the last 32 years. Yet, investors rejoiced at the announcement keeping the current financial headwinds in mind and took shares up 10% in noon trade on the New York Stock Exchange.

Comments

[liack:]

wowza

2008 Dec 02 05:10 PM

[Dividend Gr...:]

I am very skeptical of the whole dividend reiiteration thing. Citi and BAC also claimed their dividends to be safe, only to cut them several months later..

2008 Dec 02 05:38 PM

[MarvinMBA:]

Actually, GE is one of the few companies that really tries to play it straight.
Of course if we go into Depression all bets are off and this is the risk going forward. If you feel GE will survive this downdraft, go for it because the Dividend even if cut (which the company says no) still pays a lot lot lot lot more than the bank or Treasury....MarvinMBA

2008 Dec 02 06:04 PM

[drbob66:]

No doubt there will be a handful of "expert" financial analysts (or "self-professed expert" bloggers) that'll raise doubts about GE's ability/willingness to pay the $1.24 dividend in 2009 (even though GE management AGAIN reiterated their intentions today). No one trusts anyone in this environment. I fully expect to read that GE is on the verge of bankruptcy within a few weeks ("GE stocks's going below $10!...GE should be $5!!...GE's going to ZERO!!!..."). In fact, I'll probably be reading it on this site.

Nice to see the 14% gain in the stock today. I hope some short-sellers got BURNED...maybe they'll find something better to do with their time.

2008 Dec 02 06:39 PM

[yogisteve:]

Why are we allowing companies that take Gov't assistance - TARP, etc. - to keep paying dividends? If they just cut the dividend maybe they wouldn't need the TARP money. As a taxpayer I getting really sick of bailing out greedy, arrogant, s__theads that played with fire (and other people's money) and got burned.

2008 Dec 02 08:42 PM

[charrua:]

many short skeptics don't realize the strong base behind this survivor of the depression. Let them get burned by mouthing false rumors. It is so diversified that it can survive any economy

2008 Dec 02 08:42 PM

[Fliujniligui:]

They should cut that dividend for one year, I would be pleased then to snap up some thousand of shares at half the current price in 2009 as I earn some minimal money by working. I like paranoid speculators acting on next 3 months results and GE dividend cut would reinforce the company on long term, secure subsequent earning power and dividend payments, and allow me to buy all that at half the price or even better price.

2008 Dec 02 10:09 PM

[mr clark:]

so theyre fine with the $500billion + debt, no need to pay that down?

2008 Dec 02 10:36 PM

[Paul Price:]

Borrowing at 10% from Buffett to pay dividends is as stupid as it gets.

2008 Dec 02 11:37 PM

[jpe123:]

More doubletalk from Immelt and Sherin. This company is in trouble and GE Capital needs to be gone for this company to flourish.

Capital has been run by a bunch of cowboys for a long time. Time to say byebye

2008 Dec 03 06:32 AM

[cir:]

It was reported today that GE announced it will not be using TARP funds.

2008 Dec 03 10:15 AM

[Chris B:]

Exactly Paul,
I have no idea why anyone would be "cheered" by evidence that this company has only a short-term perspective and is willing to take on long-term, high interest debt in order to let their shareholders park a tiny dividend in their bank accounts earning 3%. OK shareholders, if the company you own takes on debt at 10% and pays you with it, and you can only earn 3% at a level of certainty equal to the debt, then you've destroyed value. The board is playing politics at your expense.

GE is a bank, and you can bet they will eventually be taking taxpayer money / dilution to shore up the liquidity problem that they created for themselves. After all, if they don't cause a liquidity problem, how can they get the taxpayer's money?


On Dec 02 11:37 PM Paul Price wrote:

> Borrowing at 10% from Buffett to pay dividends is as stupid as it
> gets.

2008 Dec 03 12:51 PM