General Electric Co
The U.S. conglomerate said it had no plans to raise additional equity, and that reducing its dividend from 31 cents a share would save it about $9 billion a year.
The news had been widely expected on Wall Street even prior to GE's statement earlier this month that its board would re-evaluate the payout.
Shares of GE, the world's largest maker of jet engines and electricity-producing turbines, were down 45 cents or 5 percent at $8.65 on the New York Stock Exchange on Friday afternoon, off an earlier low at $8.40.
We have determined that reducing the dividend ... is a prudent measure to further enhance our balance sheet and provide us with additional flexibility, said Chief Executive Jeff Immelt in a statement.
As recently as January, Immelt had defended the dividend. In November, the Fairfield, Connecticut-based company said it planned to pay the 31-cent quarterly dividend through 2009.
Still, troubles at its GE Capital finance unit had led some investors to wonder whether keeping the dividend was a good idea.
I am personally happy to see it happen, even though we are a big shareholder, said Peter Sorrentino, senior vice president and portfolio manager at Huntington Asset Advisors, in Cincinnati. It'll give them the ability to weather this storm better ... I know that it's in vogue to maintain a dividend, but that should never come at the expense of the franchise.
The news comes at the end of a week that saw JPMorgan Chase & Co
(Reporting by Scott Malone, editing by Leslie Gevirtz and Matthew Lewis)