GE Ousts CEO Flannery as Slump Continues

GE Ousts CEO Flannery as Slump Continues

As GE announced he would be replaced by board member and former Danaher CEO Larry Culp, it also disclosed that its power business - a major contributor to the company's declining fortunes - would take a non-cash $23 billion charge to write down the value of goodwill.

GE warned Monday that it will miss its profit forecasts this year and that it's taking a $23-billion charge.

GE will also book a United States dollars 23 billion non-cash charge related to its power business.

In June, the Dow Jones Industrial Average cut the company from its 30-company stock index - a move that reflected its shrinking position in the U.S. economy. "Of course, GE is in a very different starting position than Danaher at the time with GE's Power, balance sheet and cash challenges".

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.

Flannery's primary task when he took the reins in August 2017 was to streamline the sprawling corporate empire and set it up for continued financial health.

GE's shares fell almost one-third this year as investors anxious about the company's mounting debt and shrinking profit.

As the problems in Texas occurred, Flannery held an emergency meeting last week, calling on staff to "fight for the company", according to The Wall Street Journal.

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"During his tenure he led the highly successful transformation of the company from an industrial manufacturer into a leading science and technology company", the statement said.

The decision to exit healthcare was controversial and could potentially be reversed under Culp.

GE's businesses other than Power are "generally performing consistently with previous guidance", GE said in a statement Monday.

Culp's time as CEO of Danaher was marked by expanding the reach of the company into fields as diverse as dental imaging and water filtration. The company has lost more than $122 billion in value over that same period.

Flannery had been overseeing substantial re-organisation plans at the 126-year-old firm, which have now been thrown into jeopardy.

The division's outlook appeared to worsen last month when GE said several power plants equipped with its newest turbines had to be shut down because of a part failure. The Dow Jones Industrial Average removed GE from the blue-chip index last June, citing the company's poor performance.

"If I'm a GE employee today, I'm happy for the turnaround, but expectations are about to get a whole lot higher.GE employees will either step up or will be replaced", Davis said.

"Investors grew impatient with the lack of improvement and with the sheer scale of the problems uncovered; however, these problems were not created under his tenure", CFRA Research analyst Jim Corridore said in a note.

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