Published: Mon, October 01, 2018
Business | By Eloise Houston

GE ousts John Flannery as CEO after 14 months

GE ousts John Flannery as CEO after 14 months

Flannery will be replaced by H. Lawrence (Larry) Culp, Jr.

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

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 Power's falling profits past year forced GE to slash its overall profit outlook and cut its dividend for only the second time since the Great Depression. Thomas Horton, the former CEO of American Airlines who also joined GE's board this year, 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, scheduled to report results on October 25, declined to comment.

It's a track record that GE appears to need after a series of notable changes under Flannery failed to gain momentum immediately.

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. GE is hoping he will continue the process of shedding non-performing assets and deleveraging the company's balance sheet. It is a privilege to be asked to lead this iconic company, ' Culp said in the company's statement. It added employees, dozens of factories and service centers at a time when GE was trying to cut costs. GE will also take a charge that will be "substantially all" of the US$23 billion goodwill balance of the power unit. 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.

"We have a lot of work ahead of us to unlock the value of GE".

"He's an outsider and maybe it's going to take an outsider to come in and fix this thing", said Scott Davis, an analyst with Melius Research. "We will be working very hard in the coming weeks to drive superior execution, and we will move with urgency", Culp said.

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