GE fires chief executive and warns on profits

GE shares soar after CEO John Flannery ousted; Larry Culp takes helm

GE shares soar after CEO John Flannery ousted; Larry Culp takes helm

General Electric Co Chief Executive Officer John Flannery abruptly stepped down on Monday just over a year after taking the role, as the company warned it would fall short of its 2018 earnings guidance due to cash flow issues in its GE Power division.

In other boardroom news Monday, drugs behemoth Pfizer Inc (NYSE:PFE) saw its shares lose 0.18% to stand at $43.99 before the NY bell. GE said that during Culp's 14-year tenure, Danaher's sales increased fivefold and the stock price raced ahead of the S&P 500.

GE said there would be a substantial write-down of the $23 billion of goodwill associated with the power unit, whose prime business is producing large natural-gas turbines for electric utilities around the world.

The board's move comes in a little more than a year after it appointed Flannery as GE's chief executive. The company said the charge, which is still being finalized, will likely total almost $23 billion.

The company also announced that while other parts of the company are in line with earlier guidance, plans now call for a non-cash goodwill impairment charge related to the GE Power business - essentially wiping out a $23 billion goodwill balance.

The company said on Monday that H. Lawrence Culp, Jr. would take over as chairman and CEO effective immediately.

Culp said in a statement, "We will move with urgency". The board looks forward to working with Larry and his team to return GE to growth and long-term success.

The stock jump is a sign from Wall Street "that Flannery's leadership was not providing enough value - and that the market expects Culp to be better suited for the top position", said Tim Hubbard, assistant professor of management in the University of Notre Dame's Mendoza College of Business. Thomas Horton was named lead director.

GE's board was unhappy with the pace of the company's turnaround under Mr Flannery, and when the size of the writedown in the power plant division, which makes electric generating equipment, became apparent, the board was persuaded to seek a new CEO, according to a person familiar with the matter who requested anonymity to discuss confidential deliberations.

GE remains a fundamentally strong company with great businesses and tremendous talent.

Culp, who served as CEO and president of manufacturing company Danaher Corporation from 2000 to 2014, may "inspire confidence in turn-around potential", UBS analyst Steven Winoker wrote in a note.

Some analysts said GE Power likely missed financial targets for the third quarter, contributing to Flannery's ouster. It was replaced by the parent company of the Walgreens pharmacy chain.

The hits keep coming for GE, which was removed from the bellwether Dow Jones industrial average over the summer.

Recommended News

  • The latest news on Surface

    The latest news on Surface

    Since Microsoft is not live streaming this event, we're going to bring the news to you the "old-fashioned" way: with a live blog. There's nothing stopping Microsoft from offering a USB-C port and a USB-A port, thereby giving users to use either standard.

    Paul Scholes - Jose Mourinho 'embarrasing' for Manchester United

    Get ready, Manchester United fans, as club legend Paul Scholes is once again pulling out punches on José Mourinho. "The players, they tried, they raised the level of their effort, they raised the level of their intensity".
    Kavanaugh's memory of himself in school is very different than yearbook portrayal

    Kavanaugh's memory of himself in school is very different than yearbook portrayal

    As a general matter, he said he has never had a sexual encounter with more than a single woman present. "I can't imagine being Dr. Ramirez says he exposed himself to her during a drinking game at Yale and caused her to touch him in an unwanted way.
  • Chinese spying microchips found in Apple, Amazon computers

    Chinese spying microchips found in Apple, Amazon computers

    Supermicro said it was unaware of an investigation, while United States investigators, including the FBI, declined to comment. Apple never had any contact with the Federal Bureau of Investigation or any other agency about such an incident.
    Packages Laced With Ricin Sent To The Pentagon

    Packages Laced With Ricin Sent To The Pentagon

    The envelopes, which contained the deadly poison ricin according to officials cited by U.S. media, were discovered on Monday. The other letter was addressed to the US Navy's top officer, Admiral John Richardson, one official said.
    Cubs set for tiebreaker game to settle NL Central

    Cubs set for tiebreaker game to settle NL Central

    The Central winner would then host the WC winner in one half of the NLDS, with the West winner hosting Atlanta in the other half. Jose Quintana was scheduled to start for the Cubs, while the Brewers had yet to name a starting pitcher as of Sunday evening.
  • 'Very scary time' for young American men, says Donald Trump

    'Very scary time' for young American men, says Donald Trump

    A witness said that a friend of Kavanaugh's then threw a glass that hit the same patron in the ear, causing bleeding. Trump said to the Southaven, Miss., crowd.
    Iraq 'committed' to protecting, securing all foreign diplomatic missions

    Iraq 'committed' to protecting, securing all foreign diplomatic missions

    In a statement issued by the Iraq's foreign ministry said it "regrets the American decision to pull its staff out of Basra". In his statement on Friday, Pompeo said the United States is working with the Iraqi government to address Iranian threats.
    Prince Harry and Meghan Markle Will Visit Their Royal Namesake, Sussex

    Prince Harry and Meghan Markle Will Visit Their Royal Namesake, Sussex

    Last week Markle also parted with protocol by closing her own vehicle door at the launch of a charity cookbook . Since then the Duchess of Sussex has been making her own rules and living her life in her own way quite subtly.
  • Chelsea Won't Challenge Liverpool and Manchester City Due To This - Reds Legend

    Chelsea Won't Challenge Liverpool and Manchester City Due To This - Reds Legend

    Mourinho added: "What I can do to improve things I do, and I will improve the things that depend on me and my work". In fact, the best football United played this season was against Spurs when they lost 3-0.
    'Scary and hard  time for young men' in US

    'Scary and hard time for young men' in US

    Two other people who Ford said attended the same party have also been interviewed by the Federal Bureau of Investigation . The report says 21-year-old Dom Cozzolino told police that Kavanaugh threw ice at him for "some unknown reason".
    BeautyGate: iPhone XS vs iPhone X selfies, whether faces too smooth

    BeautyGate: iPhone XS vs iPhone X selfies, whether faces too smooth

    The scale of the issue seems to vary, with some users claiming simply switching the screen on will kickstart the charging process. In the case of errant behavior, it's worth noting that the method for force restarting newer iPhone X models has also changed.

We are pleased to provide this opportunity to share information, experiences and observations about what's in the news.
Some of the comments may be reprinted elsewhere in the site or in the newspaper.
Thank you for taking the time to offer your thoughts.