General Electric Co. soared after shocking investors by naming Larry Culp chief executive officer and chairman, as the company ousted John Flannery amid a severe share decline.
Flannery on the same day said that GE might take the radical step of splitting up the main company's three main components - aviation, health care and power - into separate businesses.
"A new CEO might not change the facts of the current headwinds, but as we have noted many times, it is hard to refute Larry Culp's track record and accomplishments at Danaher during his tenure".
The profit disappointment and massive accounting writedown are just the latest in a long line of misses dating back to the leadership of Jeff Immelt, who led GE between 2001 and June of a year ago. "It is a privilege to be asked to lead this iconic company", Culp said in a statement.
H. Lawrence Culp Jr. will take over as chairman and CEO immediately. Those included the purchase of French gas-turbine maker Alstom, which GE bought in 2015 for more than $14 billion. 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.
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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.
Stock prices have decreased by more than half since Flannery took the top job in August of 2017, and with the news of his departure, GE's shares rose 15 percent before the opening bell on Monday. The company has been forced to sell off divisions and lay off employees, a process that accelerated under Flannery.
GE traces its roots to Thomas Edison and the invention of the light bulb, and the company grew with the American economy. Its value slipped below $100 billion even as Flannery announced a breakup. He previously served as CEO and president at the conglomerate Danaher between 2000 and 2014.
"Of course, GE is in a very different starting position than Danaher at the time with GE's Power, balance sheet and cash challenges", Winoker said.