FAIRFIELD, Conn. -- General Electric Co. said yesterday that it plans to split its stock 2-for-1, increase its dividend and buy back more shares because it's churning out record amounts of cash.
The plans again reward investors who have held shares during the 15 years that Chairman and Chief Executive Jack Welch spent building General Electric's basket of businesses, which range from light bulbs to loans to jet engines.
GE has almost reached Welch's long-stated goal of being No. 1 in everything it does. Already, the company is one of the world's most valuable, with a market capital of about $168.5 billion.
"It's one of the premier companies," said Chip Reed, portfolio manager for the Florida State Board of Administration, which has 3.9 million GE shares. "I think the strongest thing GE has is depth of management."
Yesterday its stock rose $3.25 to $102.50 in trading of 4.2 million shares, nearly twice the three-month daily average of 2.4 million.
GE, one of the 30 companies in the Dow Jones industrial average, helped lift the market 127 points. The company's shares have risen 40 percent so far this year, outpacing the Dow's 25 percent increase.
GE has made more money than any other U.S. company so far this year. In the third quarter, its net income rose to $1.79 billion, or $1.08 a share, from $1.61 billion, or 96 cents, a year ago. Revenue rose to a record $20 billion.
The stock split will be GE's second in three years and its eighth overall. The company last split its stock 2-for-1 in April 1994. The split needs shareholders approval at the 1997 annual meeting in April.
GE said it will raise its quarterly dividend to 52 cents a share from 46 cents. The increase marks the 21st consecutive year of increased dividends for GE. The dividend is payable Jan. 27 to shareholders of record Dec. 31.
The company also boosted its stock buyback program 44 percent to $13 billion from $9 billion. Since December 1994, GE has bought back $6.3 billion of its stock, or 92 million shares.
Yesterday's boost in the buyback plan will allow the company to purchase its stock at an annual rate of $3 billion to $3.5 billion through 1998.
The moves demonstrate "the strong performance and future outlook of our diverse mix of leading global businesses, combined with their high level of cash generation," Welch said in a statement.
General Electric consists of 12 different businesses, all of which are No. 1 or No. 2 in market share, said Bruce Bunch, a GE spokesman.
The largest by far is GE Capital, the financial services arm that accounts for about a third of revenue. Since Welch moved from GE's plastics division to head the company in April 1981, GE Capital's net income rose to $2.4 billion last year from $129 million.
GE Aircraft Engines has seen more modest growth over the same period, rising to $5.98 billion revenue in 1995 from $2.9 billion in 1981.
Other divisions, which make appliances, light bulbs, power generation systems, plastics and medical imaging systems have also grown.
Reorganizations after Welch took the helm make the growth for those operations difficult to calculate, Bunch said.
Pub Date: 12/20/96