GE's Disappearing Dividend

Quote of the Day

Tesla Semi Truck unveil to be webcast live on Thursday at 8pm! This will blow your mind clear out of your skull and into an alternate dimension. Just need to find my portal gun…”

Market Snapshot

• The Dow ended up, while GE fell to a five-year low.
• Gold rallied after taking a major hit on Friday.
• Most Asian markets dropped, with the Nikkei slipping the most since April.
• Bitcoin recouped some of its losses after a 25% slide over the last four days.



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GE's Disappearing Dividend

GE’s (-7.17%) slimming down just in time for Thanksgiving, as CEO John Flannery announced the industrial giant will halve its dividend from 24¢ a share to 12¢. The $4 billion saved is part and parcel of a broader strategy to cut costs and focus on three core businesses: aviation, power, and health care.

It’s a historic move

But for all the wrong reasons. GE already holds the gold medal for largest dividend cut ever ($8.9 billion in 2009). Its only other dividend cut? During the Great Depression...we’ll let you connect the dots there. Not a great sign when you’re running out of money and the economy isn’t experiencing a once-in-a-generation financial crisis.

Just how desperate is GE right now? Well, it’s one of only ten companies in the S&P to decrease its payout to shareholders this year, while 310 have boosted dividends. And (GE investors: now’s the time to stop reading) as the S&P surged 16% YTD, investors made like Warren Buffett, driving GE’s stock 40% lower. It’s the Dow’s worst performer by a country mile.

Desperate times call for desperate measures

Flannery laid out a plan to transform GE from a “John of all trades” to a master of, well...some. These changes won’t happen overnight, but the long-term plan calls for:

• Reducing a significant portion (possibly a third) of the company’s 300,000-person workforce.
• Shrinking the size of the board from 18 to 12.
• Selling $20 billion worth of assets, including a 63% stake in Baker Hughes, a $40 billion company satisfying all your oil drilling needs.
• Offloading its transportation and lighting businesses (the latter established by a guy named Thomas Edison).

Yesterday wasn’t the proudest moment for the 125-year-old American icon. But sometimes you just gotta rip off the Band-Aid.

SportsCenter’s Snap 10

SportsCenter is tipping off on Snap’s Discover, bringing you 5-minute live recaps at 5am and 5pm every day. And while Snap execs are busy dumping Gatorade on each other over the platform’s first live sports show, the struggle is all too real for ESPN.

The 39-year-old Worldwide Leader in Sports hasn’t looked like much of a leader as of late. Total ESPN viewership dropped 11% from 2015 to 2016, and SportsCenter revenue is down $100 million YoY. To top things off, it’s laying off another 100 employees post-Thanksgiving. Keyword: another.

But ESPN’s staying cool as the other side of the pillow. Snap’s band of teens and millennials offers SportsCenter the chance to win over younger viewers. Because as of right now, its demographic skews towards an older (ages 30-50), cable TV-watching generation.

So if you’re sick of thumbing through the latest stories, tune into SportsCenter, hosted by Emmy-winning Katie Nolan (it was neck-and-neck between her and Sergio Dipp).

A Soft Yes for SoftBank

SoftBank is one step closer to sealing an eye-popping $10 billion position (or 14%) in Uber. Here’s what the deal’s banking on:

• Early investor Benchmark needs to drop its lawsuit against ex-CEO Travis Kalanick.
• Kalanick needs to play nice too, and let the board decide who takes over the three seats he controls.
• SoftBank must find Uber investors willing to sell their shares.

Which is harder than it looks. The company is literally purchasing newspaper ads to help spread the word.

So if SoftBank’s Masayoshi gets his wish (and he usually does), the increasingly confusing, highly incestual world of ride-hailing will look a little something like this:

SoftBank owns stakes in Ola (India), Grab (Southeast Asia), 99 (Brazil), Didi (China), and potentially Uber. Didi owns stakes in Ola, Grab, and 99. Uber owns a stake in Didi. Lyft owns a mustache.

With Uber valued at $70 billion and the industry on pace to hit $285 billion by 2030, Masayoshi and SoftBank are hoping if you throw enough ride-hailers at the wall, eventually one’s gonna stick.

Qualcomm Broadly Rejects Broadcom

Remember that earth-shattering $105 billion bid Broadcom (+0.02%) made for fellow chipmaker Qualcomm (+2.97%) a few weeks ago?

Put the confetti back in the box—Qualcomm’s board isn’t interested. Or, at the very least, not at $105 billion. And the regulatory headaches the two might face? Not worth it.

But Broadcom took the rejection in stride, continuing to view its proposal as “the most attractive, value-enhancing alternative available to Qualcomm stockholders.”

Wait a sec. Do you hear that? That low, rumbling sound? It can only mean one thing…

PROXY FIGHT.

Broadcom CEO Hock Tan might try to sweet talk Qualcomm shareholders, who can nominate pro-deal directors before a Dec. 8th deadline. After all, how sweet does “top chip supplier to 1.5 billion smartphones” sound?

Then again, Tan might also go about things more...diplomatically. In this case, upping his offer to $80-90 a share from $70.

What Else Is Happening…

• Walmart (+0.08%) is hiking online prices in an effort to lure shoppers into its stores.
• The maker of Budweiser, AB InBev (-0.33%), is switching up its leadership in North America after declining sales.
• The Missouri AG is investigating whether or not Google (-0.23%) violates the state’s consumer protection and antitrust laws.
• Reddit’s CEO said the massive internet forum is planning an IPO. When? TBD.
• PE shop Roark Capital placed a $2.3 billion bid to buy Buffalo Wild Wings.

Economic Calendar

• Monday     Earnings: Tyson Foods (+)

                    Economic Events: Treasury Budget (-)

• Tuesday    Earnings: Dick’s Sporting Goods, Home Depot

                  Economic Events: PPI

• Wednesday    Earnings: Cisco, Target

                        Economic Events: CPI, Retail Sales

• Thursday   Earnings: Best Buy, Gap, Walmart

                   Economic Events: Jobless Claims, Industrial Production, Housing Market

• Friday       Earnings: Abercrombie & Fitch, Foot Locker

                 Economic Events: No Events

By the Numbers: Reader Survey

Last week we surveyed our readers to learn a bit more about the Brew community. We weren’t quite sure what to expect, but the response has been INSANE. You have no idea how helpful this has been, and as a "thank you," here’s a little bit about....you:

52%—Readers that cited Morning Brew as their go-to business news source.

29—Median age of a Morning Brew reader. Sounds about right.

27%—Cord-cutting readers who don’t have cable, while 29% watch less than an hour of cable a day.

1 in 4—Readers that are either studying finance or work in finance. Art historians, you have a home here as well!

45%—Morning Brew readers that identify as female.

The Breakroom

Question of the Day

You have 7 bags of marbles. There are 200 marbles in total. Using the clues below, work out how many marbles are in each bag.

Bag 1 + Bag 2 = 57 marbles
Bag 2 + Bag 3 = 83 marbles
Bag 3 + Bag 4 = 71 marbles
Bag 4 + Bag 5 = 43 marbles
Bag 5 + Bag 6 = 66 marbles
Bag 6 + Bag 7 = 43 marbles

(Answer located at the bottom of newsletter)

Guess the Stock Chart

Let’s see how close you’ve been paying attention. Can you guess which company this chart belongs to? Hint: think back to Monday’s newsletter.

(Answer located at the bottom of newsletter)

Stat of the Day

(394,000)—The net number of downvotes on EA’s response to blocking certain characters in Star Wars: Battlefront II. That’s the most downvotes on a comment in Reddit history. The second most was (21,000). Don’t piss off the gamers.

Breakroom Answers

Question of the Day: Bag 1 = 31 marbles, Bag 2 = 26 marbles, Bag 3 = 57 marbles, Bag 4 = 14 marbles, Bag 5 = 29 marbles, Bag 6 = 37 marbles, Bag 7 = 6 marbles (Explanation)

Guess the Stock Chart: Mattel