GE Stock Soars After CEO John Flannery Unexpectedly Ousted

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

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

They've crashed another 35pc so far this year.

Flannery took over for longtime CEO Jeff Immelt in June 2017 with the company trying to reestablish its industrial roots, albeit a high-tech version of itself.

With a market capitalisation below US$100 billion as of Friday, GE was worth less than a fifth of its peak value a generation ago. Mr. Culp, who is known as Larry, spent roughly 15 years at the helm of Danaher Corp., a company with business units that include dental equipment, testing measurement gear and life-sciences and diagnostics equipment.

The company said Monday that H. Lawrence Culp Jr. will take over as chairman and CEO immediately.

Flannery's departure comes just 14 months after he took the helm as Chairman and CEO of the company August 1, 2017.

GE plans to provide more financial information in conjunction with its third-quarter earnings release due on October 25. Analysts surveyed by Zack's are expecting the company to report a profit of $0.22 per share, lower than the $0.29 earnings per share the past quarter.

Flannery's departure from GE is driven by "slow pace of change" under his leadership, CNBC reported. His short stint as CEO was marked by the continued drop in GE's stock price, layoffs, cuts to the company's dividend, and efforts to divest or spin out some of its businesses. That deal gave GE more exposure to older coal plant technology at a time when coal plants were being shut down as too costly.

"He's an outsider and maybe it's going to take an outsider to come in and fix this thing", said Scott Davis, an analyst with Melius Research.

Davis said the stock price has probably already adjusted to expectations of no contribution from power. Slimmed-down GE will focus on jet engines, power plants and renewable energy. The stock was an original member of the Dow Jones Industrial Average in 1896, but was unceremoniously removed in June. "However, these problems were not created under 1/8Flannery's 3/8 tenure", CFRA analyst Jim Corridore said in a note.

Tusa wrote that there could be "reset" to earnings and free cash flow as Culp moves to shore up the company after new problems surfaced at its power division. We will be working very hard in the coming weeks to drive superior execution, and we will move with urgency.

Since achieving a peak market cap of $US594 billion way back in August 2000, GE has seen its value tumbled by nearly $US500 billion. GE Power's current goodwill balance is approximately $23 billion and the goodwill impairment charge is likely to constitute substantially all of this balance. The non-cash charge primarily relates to GE's $10.3-billion acquisition of power assets from French company Alstom SA (ALSO.PA) in 2015, GE said.

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