General Electric, once one of the world’s biggest conglomerates, may be on the verge of breaking up.
GE was the worst performer in the Dow Jones Industrial Average (DJIA) in 2017. From Yahoo Finance:
2017 was a painful year for investors in General Electric (NYSE: GE) as they watched shares of the industrial stalwart crumble. The last quarter of the year was particularly difficult when GE stock lost nearly 28% in value, ending 2017 down a whopping 44.8%. Dismal numbers, top management churn, a dividend cut, a major portfolio restructuring in the works …
GE investors who depended on the dividend saw their income cut by 50%.
Despite the dividend cut, thanks to an equally sharp drop in the price of the stock, GE remains one of the top 10 yielding stocks in the DJIA.
And now there is talk about breaking GE up into separate companies. From CNBC:
“GE has started down the road to breaking itself up,” tweets CNBC’s David Faber, noting the CEO’s comments this morning on the investor call. “People close to the company tell me that outcome is likely with an announcement possible as soon as this Spring.”
From Seeking Alpha:
Nelson Peltz’s Trian Fund Management, which has seen its investment in GE decline 30% since when he bought into the company in 2015, is pushing the conglomerate to explore possible sales or spinoff of many of its businesses, including those in health and power, sources told the New York Post.
Trian founding partner and GE director Ed Garden has been spending much time recently with GE Chief Executive John Flannery, and it’s Trian that is behind GE’s decision to explore such sales.
What does this mean for GE shareholders? Management and the Board of Directors are working hard to enhance shareholder value. It remains to be seen if they are successful.