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

GE CEO John Flannery

GE also announced a massive asset-write down but its shares surged on Wall Street on Monday's news.

Last week, GE shares reached a nine-year low following a 10 percent drop after news of a glitch in new power-plant turbine technology that temporarily shut two electricity plants in Texas.

GE Power's current goodwill balance is about US$23 billion and the goodwill impairment charge is likely to constitute substantially all of this balance, the company said.

In an unexpected move, General Electric has replaced its chief executive just 16 months after appointing him. Currently, the goodwill balance of GE Power is about $23 million.

As it announced the leadership changes, GE revealed more bleak financial news: The conglomerate warned that its 2018 profit will "fall short" of guidance because of "weaker performance" at its struggling power division. "It is a privilege to lead this iconic company". "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". Immelt remained on as chairman through his retirement at the end of 2017, after which Flannery assumed that role as well.

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

GE, however, has not seen such gains, particularly when it comes to its power business which was hit by problems with its latest generation of gas turbines and posted a $10 billion loss previous year.

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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.

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.

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

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

Culp, 55, was president and CEO of Washington, D.C. -based science and tech company Danaher Corp. from 2000 to 2014. It was replaced by the parent company of the Walgreens pharmacy chain.

Flannery vowed to give GE more of a high-tech and industrial focus by honing in on aviation, power and renewable energy - businesses with big growth potential. But shares have dropped almost 54 per cent over the past 12 months, and in June it was kicked out of the Dow Jones Industrial Average after 111 years on the blue-chip index.

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