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General Electric New CEO Offers Penny For Shareholder Thoughts

Daniel Chase

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The common objective opinion in the market is that blue-chip companies typically pay a nice dividend to investors, and you can always count on them to have your back. General Electric (GE), the iconic power conglomerate originally founded by Thomas Edison himself, has been, for decades, a company that supports the blue-chip theory. Up until recently, GE (GE) remained in the green, but after months of radio silence, the company’s CEO Larry Culp is faced with reviving his dying company and reinsuring his shareholder’s investments. 

However, on Tuesday, it seems as though Culp made matters much worse. The company, via Culp, announced that beginning in 2019, quarterly dividends for shareholders will amount to roughly $0.01 per share in an effort analyst believe may “free up cash for the beleaguered company once treasured by shareholders for its payout.”

“The dividend cut to close zero will help on this front, but we also don’t think the cut is a silver bullet, and the severity highlights the challenged capital position here.”

Stephen Tusa, analyst J.P. Morgan 

Culp’s decision to cut the company’s quarterly dividends represents is the first major move during his first month as GE’s (GE) chief executive officer. On Oct. 1, the company’s previous chief executive, John Flannery was removed from his position as a result of the board’s dissatisfaction with “the execution that was taking place under (his) leadership,” CNBC’s Andrew Sorkin said on “Squawk Box,” citing sources. 

According to CNBC and several other media outlets, Flannery’s removal was largely driven by the “slow pace of change” under his leadership, and not driven by the power business’ woes.” At the time of Flannery’s removal, the company’s shares had fallen to a nine-year low, trading at $11.27 per share. During Flannery’s time as CEO, the company announced that there were multiple issues with its newest line of natural gas-fired power turbines. GE’s (GE) Power Chief Executive Russel Stokes explained, in a blog post on his LinkedIn profile, the issues related to the “HA turbines.”

“More recently, we identified an issue that we expect to impact our HA units. It involves an oxidation issue that affects the lifespan of a single blade component.”

Russel Stokes, Power Chief Executive General Electric 

Imagine the collective concerns of GE’s (GE) shareholders as well as new CEO Larry Culp that arose from the mess made under the auspices of John Flannery. Suffice to say, when Culp was named to the position on the same day his predecessor was removed, his work was cut out for him. 

As a result of Culp’s dividend cut, GE (GE)reportedly expects to retain about $4 billion in cash a year. Many analysts believe GE (GE) will try to raise capital after the company’s dividend cut to create a safety net for the future of the company, but Culp immediately responded to these allegations, saying he has “no plans for an equity raise.” 

While the industrial conglomerate’s energy department has dealt with multiple snafus over the course of the last year, GE’s (GE) aviation department has managed to withstand harsh conditions and safely reach their destination, posting a near 7% increase in profits from last year, according to CNBC. In the interest of preserving what’s left of GE’s (GE) power division, Culp announced on Tuesday, that the division will be reorganized as a gas products and services business, rather than one that sells turbines to gas and coal-fired power plants as it has in the past. 

Analysts believe Culp’s decision to do away with the dividend is an absolute necessity if GE (GE) stands any chance of mending its wounds from the last year, but Jack Degan, chief investment officer at Harbor Advisor, is concerned for the effect this will have on the company’s long-time shareholders:

“Although I agree with the decision to eliminate the dividend because they certainly need that extra cash for restricting and dealing with liabilities like a dramatically underfunded pension, this is going to be painful for those individual shareholders who love on their dividend. 

Jack Degan, chief investment officer, Harbor Advisory 

Look, its a pretty bold move on Larry Culp’s part, but after inheriting a dying power company replete with a myriad of issues, while still being expected to ensure the company’s performance, this decision makes sense. Only time will tell as to whether the company’s shareholders and the market feel the same way. 

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Got That Friday Feeling? We Do Too! April 26, 2019 Morning Update

Jon Phillip

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Can You Detect A Winner?

We live in a world where threats to our safety, both large and small, have impacted the way we as a society live.  Increased security measures are being taken in several aspects of daily life such as entering a school or even a baseball game, often causing large delays.  Worse off, not all current security measures are stopping these threats before they happen. One company is working on a solution to combat these issues, NOW. Click Here & See For Yourself

Reviving The Lost Interest In The Gold Mines: McEwen

From the viewpoint of a mining executive, a loss in interest in gold mines is being assessed. After dabbling in other activities in the mining sector, firms and companies must switch back to their core activity of finding new gold mines. What could this mean for mining stocks? Click For Full Article

Saudi’s Minister Has No Plans To Boost Oil Production After Iran Oil Waivers End

On Wednesday, Saudi Arabia’s Energy minister Khalid al-Falih said that there was no need to immediately increase oil output. This followed the ending of waivers granted by the US to Iranian crude oil buyers. He added that Saudi Arabia will only respond to increase oil output if there is an increase in demand. Read More, Now.

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Saudi’s Minister Has No Plans To Boost Oil Production After Iran Oil Waivers End

Jon Phillip

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oil and gas news

On Wednesday, Saudi Arabia’s Energy minister Khalid al-Falih said that there was no need to immediately increase oil output. This followed the ending of waivers granted by the US to Iranian crude oil buyers. He added that Saudi Arabia will only respond to increase oil output if there is an increase in demand.

The Decision Not To Increase Output Based On Market Fundamentals

The minister said that his decision was based on oil market fundamentals rather than prices and that they still remain focused on stabilizing the global oil market.  Speaking in Riyadh, Falih said that despite the rising of inventories as a result of sanctions on Iran and the situation in Venezuela it was not necessary to have an immediate response to increase oil output.

Last year the US granted Iranian oil buyers exemptions from sanctions but it has tightened the line by deciding not to renew them.  Saudi Arabia intends to remain within its OPEC production limit as well as be intent to its customers. More so those under waivers and those that have seen their waivers withdrawn. 

The minister said that they are not going to pre-empt the same and increase their output. Oil production number for May are set. It had little variations from previous months. Furthermore, crude oil allocations for June will be decided next month.

Oil Prices Have Been Increasing Since November

Since November, Oil prices have increased. This follows the announcement by the US that all waivers on imports of Iranian oil will not be renewed to put pressure on buyers to stop buying oil, from Iran. This ends up tightening global oil supply. 

On Wednesday, Brent Crude futures dropped to trade at $74.18 per barrel. This followed a statement from the International Energy Agency. This indicates that markets are adequately supplied and global production is stable.

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Reviving The Lost Interest In The Gold Mines: McEwen

Joe Samuel

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gold mining stocks to buy

From the viewpoint of a mining executive, a loss in interest in gold mines is being assessed. After dabbling in other activities in the mining sector, firms and companies must switch back to their core activity of finding new gold mines. What could this mean for mining stocks?

Rob McEwen, CEO and Chairman of McEwen Mining (MUX) says, the first few months of the year has brought and encouraged the attention and interest of the investors in the mining of precious metals sector. But, now it is extremely important to bring up some new discoveries and execute some exploration plans in order to give consistency to the investors’ attention.

New Opportunity For Mining Stocks?

He remarks that a new zeal is required to bring enthusiasm to the investors. The current market is in need of some extraordinary news. He even said that there is no lack of money in this sector and that investors just need to work upon it and create shareholder values.

Chairman McEwen commented as the prices of the gold is consistently falling since3-4 months causing damage to the mining sector. Companies like June Gold Futures and VanEck Vectors Gold Minors ETF last traded at $1,273.50/ounce, and $20.92/share respectively and the former went down 0.32% while the latter faced 0.29% fall on the day.

According to McEwen, a few companies are working in this direction to revive the interest in these mines. These companies are Kirkland Lake Gold (its record production) & Great Bear Resources (its active program of exploration) are mentioned by him in this regard.

McEwen, as per his plans, is heading for extensive drilling plans in North America. He introduced that his company is going to invest $17 million at Black Fox Property’s (North Ontario) exploration plans and $5 million at Gold Bar Mine (Nevada).

McEwen believes that such resources are full of potential and can create peerless mines in the world.

McEwen planned for the aforementioned two plans as the world saw a degradation in the production at Gold Bar due to massive snowfall at Nevada. And also, the production at Black Fox was affected as the contactor-run crushing plant was shut down for 6 weeks in February.

Growth Is The Focus

But McEwen is definite to complete its target no matter what. He said the company will fulfill its 2019 target of gold production of 205,000 ounces. In the first 3 months of 2019, he claimed the gold production of 36,166 ounces. This is 18% more than the gold production in the first 3 months of 2018.

McEwen gave a positive statement saying that price and the interest of investor will be gained back soon once the gold mines receive adequate attention. He says that the mining sector is facing a lacuna of sentiments of investors.

He even said that the importance of gold mines could be seen as unlike investors, Central Bank is showing stability in hiking the bank’s gold reserve and continuing to see it as an international currency. So, it is still important for those investors who are seeking protection for their investments.

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