GE’s Flannery steps down as CEO, shares jump 15pc

Ebony Scott
October 4, 2018

General Electric head John Flannery is out after just more than a year at the top of the company.

Tusa added that GE shares tend to outperform on the day of major news events that "change the narrative" on sentiment such as the June 2018 news of plans to separate GE's health-care business and cut debt, as well as the resignation of former CEO Jeff Immelt in June 2017.

With a market capitalization below $100 billion as of Friday, GE was worth less than a fifth of its peak value a generation ago.

The company said it would miss its 2018 profit forecast because of "weaker performance" in its power business.

Larry Culp, who is highly respected on Wall Street for transforming manufacturer Danaher Corp., takes over immediately, GE said in a statement Monday.

GE shares (GE) were up 12 percent in early trading at $12.63; they rose 15 percent in premarket trading. The non-cash charge primarily relates to GE's $10.3-billion acquisition of power assets from French company Alstom SA (ALSO.PA) in 2015, GE said. As such, the company expects to take a non-cash goodwill impairment charge related to the GE Power business of about $23 billion.

Culp served as chief executive officer and president of Danaher Corporation from 2000 to 2014.

GE gave no explanation for Flannery's abrupt removal but CNBC reported it was "driven by the board's frustration with the slow pace of change under his leadership". Under Immelt, GE's shares lost more than a third of their value.

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Flannery will be replaced by H. Lawrence (Larry) Culp, Jr. Flannery's time as CEO has been filled with challenges and the company has sold off several businesses in an effort to right the ship.

GE, however, has not seen such gains, particularly when it comes to its power business which was hit by problems with its latest generation of gas turbines and posted a $10 billion loss a year ago.

During Flannery's tenure, GE shares tumbled 61 percent - while the S&P 500 gained 20 percent. But shares have dropped almost 54 per cent over the past 12 months, and in June it was kicked out of the Dow Jones Industrial Average after 111 years on the blue-chip index. It is a privilege to be asked to lead this iconic company. He may run the company for two to three years before returning to the board, Davis wrote.

That industry publication honor may provide a measure of solace as GE Power employees contemplate a newly tumultuous future.

In other boardroom news Monday, drugs behemoth Pfizer Inc (NYSE:PFE) saw its shares lose 0.18% to stand at $43.99 before the NY bell.

'We remain committed to strengthening the balance sheet including de-leveraging'. It is not a solicitation to make any exchange in commodities, securities or other financial instruments.

Culp said in a statement, "We will move with urgency".

Other reports by GizPress

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