General Electric ditches boss John Flannery and takes $23bn hit

Alicia Cross
October 2, 2018

General Electric Co. shares soared as the board made the shocking move to name director Larry Culp to take over as chief executive officer - just a bit more than a year after John Flannery took the reins of the beleaguered former industrial icon. In a press release announcing the move, GE also said it would be taking a $23 billion non-cash charge for its power business and will miss profit expectations for 2018. It will take a charge of about $23 billion to write down what's called "goodwill", the intangible value of the power division. More than 90 percent of the transactions Culp oversaw at Danaher were company takeovers, according to data compiled by Bloomberg.

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. "It is a privilege to be asked to lead this iconic company", Culp said in a statement. "I am excited to get to work".

Mr Culp, 55, who will also be chairman as well as chief executive, said GE "remains a fundamentally strong company with great businesses and tremendous talent".

Mr Flannery had been in the role for less than two years.

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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. The stock has more than halved since Flannery took the top job in August previous year. The company was also forced to cut its dividend in half and uncovered massive insurance-related losses under Flannery's watch, as the company struggled to transform its focus.

Flannery's departure from GE is driven by "slow pace of change" under his leadership, CNBC reported, citing a text from a source. He previously served as CEO and president at the conglomerate Danaher between 2000 and 2014.

"We remain committed to strengthening the balance sheet". "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".

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