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Non-Tech : Bill Wexler's Trading Cabana -- Ignore unavailable to you. Want to Upgrade?

To: Hank who wrote (4906)	2/8/2009 10:24:20 AM
From: RockyBalboa	1 Recommendation Respond to of 6370

GE update: GE’s Battle to Keep Dividend ‘Not Worth Fighting’: Chart of Day Email \| Print \| A A A By David Wilson Feb. 6 (Bloomberg) -- General Electric Co. Chief Executive Officer Jeffrey Immelt’s battle to maintain the dividend this year “is just not worth fighting,” according to C. Stephen Tusa, a JPMorgan Chase & Co. analyst. The CHART OF THE DAY shows how GE’s dividend payout ratio has risen since 1994, according to data compiled by Bloomberg. Last year’s dividends amounted to 69 percent of profits, about 20 percentage points higher than the period’s average. GE is likely to cut the payout, costing $13.4 billion annually, during this year’s second half after losing its top credit ratings in the first half, Tusa wrote in a report today. GE’s businesses won’t generate enough cash to cover the 31- cent-a share quarterly dividend through 2010, according to Tusa. Their cash flow will drop to $9.6 billion next year from $10.3 billion this year, he estimated. Any reduction in the payout is “going to be deep so the company does not have to come back for another cut,” he wrote. Option prices point toward a 50 percent drop, he added, and the projection “looks reasonable.” Tusa, who rates GE “neutral,” trimmed his share-price estimate for the next six to 12 months to $9 from $13. His new target is 17 percent below yesterday’s close of $10.85. It’s the lowest among brokerage analysts, Bloomberg’s data show. To contact the reporter on this story: David Wilson in New York at dwilson@bloomberg.net Last Updated: February 6, 2009 10:25 EST