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GlaxoSmithKline stock plummets 6% after concerns about dividend risk

GlaxoSmithKline PLC GSK, -5.93% shares plummeted 6% in extremely heavy midday trade Wednesday on concerns that the company's interest in Pfizer Inc.'s PFE, -0.29% over-the-counter business could put its dividend at risk. After being asked if she could give investors assurances that the potential deal would carry no dividend risk, Chief Executive Emma Walmsley did not exactly give those assurances. "We know the dividend matters to our investors. We intend and we do pay it now as a function of our free cash flow after investing in the necessary priorities to secure long-term growth for the company," Walmsley said, according to the FactSet transcript of the company's third-quarter earnings call, adding, "we confirmed our intentions to pay the dividend in 2017 of 80 pence and again in 2018 and then we will be returning to declaring the dividend quarterly and not giving a more specific outlook beyond that." When Walmsley was again pressed about the potential Pfizer deal, she said it was "too premature and hypothetical." "For us, even though we believe pricing (mostly in Respiratory) and competitive concerns (Respiratory and HIV) are largely factored into the stock at current levels, investors remain focused on the safety of the dividend," said Leerink Partners analyst Seamus Fernandez. GlaxoSmithKline shares have dropped 9.5% over the last three months, compared with a 2.9% rise in the S&P 500 SPX, -0.45%