The ouster of John Flannery, a 30-year GE veteran, comes barely a year after he took over in a bid to rescue to the company, long a pillar of American industry that has seen its shares tailspin 35 percent since the start of the year.
Larry Culp, a GE board member who ran United States manufacturer Danaher for more than a decade, is to replace GE veteran John Flannery, effective immediately.
Turning a big ship takes time, but GE lost faith in its captain.
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.
GE said it would fall short of its previously indicated guidance for free cash flow and earnings per share for 2018 due to weakness in its power business.
GE Power's current goodwill balance is about $23 billion and the goodwill impairment charge is likely to constitute substantially all of this balance, the company said, though cautioning the charge is not finalized and subject to further review. While running business development at GE Corporate, he spearheaded the acquisition of Alstom's power business, which doubled GE's installed power base and strengthened its renewables portfolio.
The company said on Monday that H. Lawrence Culp, Jr. would take over as chairman and CEO effective immediately. "It is a privilege to lead this iconic company". "However, we believe that CEO Culp will, at a minimum, re-baseline the company, drive execution and make long-term decisions that benefit the company and shareholders".
The stock jumped 14% as Wall Street cheered the leadership change.More news: Indonesian quakes, tsunami death toll rises to 1,249
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Additionally, the GE board appointed Thomas W. Horton as lead director.
Culp, 55, is credited with leading a turnaround at Danaher, which makes everything from dental tools to consumer packaging. The company was expelled this year from the Dow Jones Industrial Average.
In other words, exactly the opposite of the situation at GE.
The announced leadership changes resulted in a almost 14% stock price increase in premarket trading. Losses have mounted as investors have grappled with the toxic combination of increasing debt and diminishing profits.
"Investors grew impatient with the lack of improvement and with the sheer scale of the problems uncovered", CRA Research analyst Jim Corridore wrote to clients. That deal gave GE more exposure to older coal plant technology at a time when coal plants were being shut down as too costly.
GE cited "weaker performance in the GE Power business" as one reason for the change at the top. As recently as 2004, GE was the most valuable company in America, worth almost $400 billion.
Culp, for his part, tried to sound optimistic.
Flannery's response has included the sale of some assets and the elimination of more than 12 000 GE power jobs.