The new chairman and CEO of General Electric is never going to have more "political capital" to cut the dividend than now, longtime GE shareholder Jack De Gan told CNBC on Friday after a huge earnings miss slammed shares of the industrial conglomerate.
De Gan was commenting on recent market speculation that GE may reduce its dividend and use the cash to help turn the company around.
GE Chief Executive John Flannery has "one opportunity to cut the dividend, and this is it," argued De Gan, who invests in GE on behalf of clients at New Hampshire money management firm Harbor Advisory, where he's chief investment officer. He said he does not personally own any GE stock.
"Clearly a dividend cut would free up a lot of flexibility for John Flannery to execute his restructuring; $8 billion a year in dividends is a big burden," De Gan said on "Squawk Box." "It would upset the shareholder base. And the stock would be dead money for while. [But] this is when he should do it, if he's going to do it."
Earlier Friday, GE reported adjusted third-quarter profit of 29 cents per share, missing estimates by 20 cents. GE also cut its full-year outlook to a range of $1.05 to $1.10 per share versus estimates of $1.53 per share. GE stock fell as much as 8 percent in premarket trading, but shortly after the opening bell, it was down about 3 percent to $22.75.