Economy

GE's Flannery steps down as CEO, shares jump 15 percent

GE's Flannery steps down as CEO, shares jump 15 percent”

Flannery is being replaced by H. Lawrence Culp Jr., the former CEO of Danaher, an industrial company. In a press release announcing the move, GE also said it would be taking a $23 billion non-cash charge for its power business and will miss profit expectations for 2018.

GE shares jumped 10.2 percent to $12.44 as investors bet Culp could re-energize the GE brand and more quickly transform its portfolio. GE had fallen 35 percent this year through September 28, following a 45 per cent decline in 2017.

"GE remains a fundamentally strong company with great businesses and tremendous talent", said Culp. Thomas Horton was named lead director.

The Boston-based company's shares closed at $11.29 on Friday, with a total market capitalization of about $98 billion.

GE is scheduled to report earnings October 25th before the market opens.

It was not immediately clear whether GE's strategy of divestitures and asset sales would change with new leadership. In a statement on Monday, GE lauded Culp's tenure at Danaher and said that he "executed a disciplined capital allocation approach, including a series of strategic acquisitions and dispositions", among other activities.

One thing that may not have endeared Flannery to its board was his inability to get investors to buy into his plans to right the ship. Culp specifically cited improving GE's balance sheet and reduce its debt load, but acknowledged that he and his team "have a lot of work ahead of us". It added employees, dozens of factories and service centers at a time when GE was trying to cut costs.

The company, a bellwether for manufacturing, also announced a $23bn impairment charge against the value of its power division.

The stunning shakeup underscores the magnitude of the crisis at GE, which has lost half a trillion dollars in market value since the peak in 2000.

Flannery vowed to give GE more of a high-tech and industrial focus by honing in on aviation, power and renewable energy - businesses with big growth potential.



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