General Motors Corp. slashed its common stock dividend and will trim its salaried job rolls by 15 percent as the nation's biggest automaker takes steps to brace for hard times.
The quarterly dividend - the portion of profits the company shares with its stockholders - was cut from 75 cents per common share to 40 cents. It was only the third time the nation's largest automaker has taken such action, a spokesman said.By cutting the dividend, GM is recognizing its earnings will be significantly lower than expected, said Ron Glantz, analyst with Dean Witter Reynolds Inc.
"You don't lightly cut the dividend," he said.
Glantz said the severity of the dividend cut should protect shareholders from further dividend reductions. GM, with 2 million shareholders, is one of the country's most widely held stocks.
The company cut its dividend the first quarter of 1975, reinstating it 15 months later, and in the second quarter of 1980 until the fourth quarter of 1983.
"Any reductions in dividends represents an extremely difficult decision in view of the great importance we place on the interest of our stockholders," said GM Chairman Robert C. Stempel in a prepared statement.
GM also will cut its salaried work force of about 99,000 people by 15 percent by 1993, mostly through attrition and early retirement for employees aged 53 to 61, GM spokesman Terrence Sullivan said.
General Motors's board made the moves Monday in response to the deepening slump in auto sales, now worsened by the gulf war, the company said.
GM, along with Ford Motor Co. and Chrysler, is expected to report losses for the last three months of 1990. GM is expected to post about a $1.4 billion loss, compared with earnings of $700.2 million in the fourth quarter of 1989.