GE ousts Flannery, names Lawrence Culp chairman and CEO

Daniel Fowler
October 2, 2018

"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".

GE said it will take a $23 billion goodwill charge for its power business. Culp led Danaher from 2000 to 2014, helping grow an industrial company into a broader conglomerate through a series of acquisitions, while growing earnings.

GE shares jumped 10.2 percent to $12.44 as investors bet Culp could re-energise the GE brand and more quickly transform its portfolio. Company shares are on pace for their largest single-day percentage increase since March 2009. He will be replaced as chairman and CEO by H. Lawrence Culp, Jr.

General Electric shares had declined almost 56 percent since Flannery took over as CEO with a mandate to cut costs and refocus the company on its profitable segments.

GE has been hobbled by years of poorly timed deals and needless complexity. We remain committed to strengthening the balance sheet including deleveraging.

The company has also appointed former American Airlines chief executive Thomas Horton as lead director on its board.

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

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GE has endured a hard year in which it has lost more than half of its stock market value and been ejected from the Dow Jones Industrial Average after more than a century's membership.

Flannery, by contrast, "missed targets and was slow to enact change, creating doubts that an insider like him was capable of doing the heavy lifting needed to turnaround GE", Briefing added.

The company's stock price leaped 15 percent after the announcement Monday morning, before coming down from that spike.

Growth in the company's newly reinvented energy storage business, renewable generation and digital grid services has not reached the point of substituting for the conventional power revenues. The company was expelled this year from the Dow Jones Industrial Average.

But he cautioned that the stock market's embrace of the shakeup may be "premature" because the "new CEO will face the same problems as the old". Culp said in a statement, "We have a lot of work ahead of us to unlock the value of GE".

A goodwill impairment charge is a write-off used to balance a company's books when the recorded value of an asset or liability is determined to be greater than the fair value, according to Investopedia.

GE also said it will take an impairment charge constituting almost all of the $23 billion of goodwill associated with its power segment, which has struggled with a downturn in the gas-turbine market.

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