Published: Tue, October 02, 2018
Markets | By Jeffery Armstrong

General Electric CEO John Flannery is out

General Electric CEO John Flannery is out

The restructuring has had little positive impact on General Electric shares. In the release, the company said that the change in management will be effective immediately.

Additionally, fellow board member Thomas W. Horton, 57. a onetime chairman and CEO of American Airlines, has been appointed lead director.

GE also announced its cash-flow and earnings per share would be less than previously indicated, because of problems at its GE Power division.

GE said it will take a $23 billion goodwill charge for its power business.

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"The challenges that GE faces (high leverage; Power's cyclical, structural and operational challenges; etc) are not easily or quickly fixable".

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.

He will be replaced as chairman and CEO by H. Lawrence Culp, Jr.

In hiring Mr. Culp, 55 years old, GE brought in a leader who ran what some investors saw as a model industrial conglomerate. "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". 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".

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"Tom and I will work with our board colleagues on opportunities for continued board renewal".

While noting that while Culp has work to do, "I wouldn't want to bet against Larry", Davis added.

"We are not sure if this news implies a radically different strategic plan than the one announced in June, given Mr. Culp's involvement at the time".

However, as Flannery has restructured the multinational conglomerate, its value has dipped below $100 billion and shares are down more than 35 percent this year, following a 45 percent decline in 2017.

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Flannery, promoted from his most recent job as GE's health care division chief last summer, spent more than 30 years at the company. Of course, our partners at Trade Ideas were the first to alert us to the gains. In particular, we're interested infollowing the story surrounding the company's movements with new leadership at the top. Start finding winning trades in minutes with Trade Ideas! Nonetheless, we'll continue to follow the story closely and bring the news to you as it breaks!

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