What it implies is that the deterioration is deep-rooted, underscoring the popular opinion that it should be fixed at the basic level. All along, GE kept on reminding the world that it is committed to considering options that would generate value for shareholders.
Interestingly, one of the solutions explored and implemented by Flannery was to reduce the dividend amount and use the savings to fund the restructuring. It’s a strategy that made sense only to the most optimistic among the shareholders as the dividend was the only factor, other than GE’s strong fundamentals, which lured long-term investors to the stock.
GE stock retreated at a faster pace this week than it did during the previous big fall
That’s exactly what those at the helm of affairs at GE have been contemplating for a long time now — a comprehensive restructuring with a primary focus on splitting the industrial giant into independent units. The argument is that a spin-off of such degree would unlock value for investors.
But, it’s easier said than done; and the challenges are multi-faceted, with GE’s multi-billion dollar pension arrears topping the list. The fact that a whopping $6-billion credit the company availed for the purpose is good enough to address only a fraction of the pension issue.
The deficit, combined with lack of funding, would make the process of breaking up the company a precarious affair.
In its latest falling streak, the stock lost more than 1% to trade below the $13-mark on Monday. It also dragged the otherwise healthy DOW to the negative territory.