General Electric Co Chief Executive Officer John Flannery abruptly stepped down on Monday just over a year after taking the role, as the company warned it would fall short of its 2018 earnings guidance due to cash flow issues in its GE Power division. GE will need to take a goodwill impairment charge of almost all the $23 billion in its goodwill balance, according to the company.
Flannery will be replaced by H. Lawrence (Larry) Culp, Jr.
General Electric removed John Flannery as CEO and named Larry Culp as the new CEO of the company.
General Electric Chief Executive Officer John Flannery presents the company's new strategy and financial targets to investors at a meeting in NY, U.S., November 13, 2017. In the case of GE, the news proved to be overwhelmingly positive.
Stock prices have decreased by more than half since Flannery took the top job in August of 2017, and with the news of his departure, GE's shares rose 15 percent before the opening bell on Monday.
In the press release, Mr. Culp said, "GE remains a fundamentally strong company with great businesses and tremendous talent".
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Flannery replaced Welch successor Immelt, himself pushed out earlier than expected last summer after nearly 16 years at the top.
Culp is known as a specialist in turning companies around.
"We remain committed to strengthening the balance sheet".
Additionally, fellow board member Thomas W. Horton, 57. a onetime chairman and CEO of American Airlines, has been appointed lead director. He has already pledged to sell or spin off longtime GE businesses including transportation, health care and lighting while focusing on power equipment, renewable energy and jet engines. He previously served as CEO and president at the conglomerate Danaher between 2000 and 2014.
"Under Culp, investors may be willing to look further out to assess what GE may be worth post the planned portfolio moves, which may sustain the bounce in the stock that we expect today". "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".