After less than two years and declines on several fronts at General Electric, John Flannery has been ousted as the leader of the century-old company.
Flannery took over for longtime CEO and Chairman Jeff Immelt in August 2017 with the company trying to re-establish its industrial roots, albeit a high-tech version of itself.
However, as Flannery has restructured the multinational conglomerate, its value has dipped below $100 billion and shares are down more than 35 per cent this year, following a 45 per cent decline in 2017.
It has not gotten any better.
The company was booted from the Dow Jones Industrial Average this summer and last month, shares tumbled to a nine-year low after revealing that is marquee gas turbine was flawed, an ‘oxidation issue” forcing the shutdown of a pair of power plants where they were in use.
GE warned Monday that it will miss its profit forecasts this year and it’s taking a $23 billion charge related to its power business.
H. Lawrence Culp Jr. will take over as chairman and CEO immediately. The 55-year-old Culp was CEO and president of Danaher Corp. from 2000 to 2014. During that time, Danaher’s market capitalization and revenues grew five-fold. He’s already a member of GE’s board.
That’s a track record that GE, after 16 months of punishing declines, is hungry for.
The turnaround effort under Flannery does not appear to have gained the momentum desired by the board.
Just six months after taking over as CEO, Flannery said the company would be forced to pay $15 billion to make up for the miscalculations of an insurance subsidiary. While Wall Street was aware of the issues at GE’s North American Life & Health, the size of the hit caught many off guard.
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.
In June GE said it would spin off its health-care business and sell its interest in Baker Hughes, a massive oil services company. It’s been selling off assets and trying to sharpen its focus since the recession, when it’s finance division was hammered.