Beleaguered General Electric will split its GE Power division into two units, the company announced during its delayed third-quarter earnings report Tuesday.
GE also recorded a non-cash and pre-tax impairment charge of $22 billion—announced earlier this quarter—related to its Power unit. The dividend paid to shareholders was slashed from 12 cents to one cent per share starting near the end of the quarter.
New CEO Lawrence Culp, who was brought in from the board of directors about a month ago when John Flannery was ousted after only a year on the job, said the company needs to change quickly, starting with the splitting of Power. The earnings report was postponed from its original Oct. 25 date to give Culp time to understand the company’s situation.
“After my first few weeks on the job, it’s clear to me that GE is a fundamentally strong company with a talented team and great technology,” he said. “However, our results are far from our full potential. We will heighten our sense of urgency and increase accountability across the organization to deliver better results.”
GE Power will be reorganized into two units—one focused on a unified gas business combining product and service groups, and the other comprising Steam, Grid Solutions, Nuclear and Power Conversion. The GE Power headquarters structure will be consolidated.
“We are on the right path to create a more focused portfolio and strengthen our balance sheet,” Culp stated. “My priorities in my first 100 days are positioning our businesses to win, starting with Power, and accelerating deleveraging. We are moving with speed to improve our financial position, starting with the actions announced today. I look forward to updating you further on our progress in early 2019.”
Yet the company is also hobbled by a U.S. Securities and Exchange Commission probe into its accounting on the writedown, according to reports.
GE Power also has been forced to acknowledge that several of its HA-series turbines were shutdown after problems with the turbine blades were found.
Shares of GE also traded below $10 and hit their lowest point in nearly a decade.