GE Abruptly Fires CEO John Flannery, Appoints Lawrence Culp as Chief Executive

General Electric shares jolted higher in pre-market trade

General Electric shares jolted higher in pre-market trade

General Electric Co. soared after ousting John Flannery a little more than a year into his tenure as chief executive officer, replacing him with a renowned turnaround expert.

The shares had more than halved since Flannery, a three-decade GE veteran, became CEO in August 2017 to replace Jeff Immelt, who had led GE since 2001.

General Electric's decision Monday to part ways with CEO John Flannery just one year into his tenure came amid a prolonged stock slide that has seen the one-time industrial juggernaut shed market value roughly equal to that of Facebook.

The announcement of Flannery's departure sent GE's stock price sharply higher in pre-market trading. As such, the company expects to take a non-cash goodwill impairment charge related to the GE Power business of about $23 billion.

The company's stock was up more than 15 per cent in pre-market trading in NY shortly before 1300 GMT.

It's a track record that GE appears to need after a series of notable changes under Flannery failed to gain momentum immediately, although some analysts wonder whether Culp's history of accomplishments will be enough to reverse the direction of the company.

"GE remains a fundamentally strong company with great businesses and tremendous talent", H. Lawrence Culp, the company's new CEO, said in a statement.

In a statement, Culp called his new position a "privilege" and said that he plans to "move with urgency" to address the company's woes.

The struggling energy, health and transportation conglomerate said it would fall short of its forecast for free cash flow and earnings per share for 2018 due to weakness in its power business, something analysts had expected.

While noting that while Culp has work to do, "I wouldn't want to bet against Larry", Davis added. Thomas Horton, the former CEO of American Airlines who also joined GE's board this year, was named lead director.

With a market capitalisation below $100 billion as of Friday, GE was worth less than a fifth of its peak value a generation ago. So, by putting an end to Flannery's almost 2 year tennure at the company and bringing a trusted leader on board to replace him, the company has excited investors.

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

GE doubled down on fossil fuels in 2015 under Immelt with the US$10.3-billion purchase of French group Alstom SA's power business. The company has been forced to sell off divisions and lay off employees, a process that accelerated under Flannery. Flannery cut the blue chip stock's dividend in half a year ago.

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