As GE announced he would be replaced by board member and former Danaher CEO Larry Culp, it also disclosed that its power business - a major contributor to the company's declining fortunes - would take a non-cash $23 billion charge to write down the value of goodwill.
General Electric on Monday removed John Flannery as CEO after only a year on the job, apparently reflecting the board's loss of confidence in his ability to dig the troubled conglomerate out of a severe slump. The stock was up almost 9 percent to $12.29 in Monday trading after the CEO announcement.
Through its Paris-based GE Renewable Energy division, GE is among the world's top suppliers of onshore wind turbines and hydropower equipment, and is aggressively pushing into the offshore wind market.
Despite this, GE's share price continued to.
GE Power's current goodwill balance is about $23 billion and the goodwill impairment charge is likely to constitute substantially all of this balance, the company said, though cautioning the charge is not finalized and subject to further review.
Although Flannery, a 30-year GE veteran, moved quickly to slash costs after taking the reins in August 2017, the board wanted him to quicken his pace, according to a source.
A note from Briefing.com said Culp's appointment was promising, saying that he led "Danaher's transformation from an industrial manufacturer into a leading science and technology company".
'GE remains a fundamentally strong company with great businesses and tremendous talent. We will be working very hard in the coming weeks to drive superior execution, and we will move with urgency. The executive, who also teaches at Harvard Business School, only joined the GE board in April.
Last year, Mr Flannery announced a turnaround plan aimed at simplifying the business model of the conglomerate, which had grown to encompass everything from light bulbs to loans.
"Everything's on the table, with no preconceptions and no sacred cows", Flannery said in a June Wall Street Journal interview in which he discussed plans to shed the company's health care and oil businesses. Analysts warn that GE's financial problems could force the company to cut its dividend again. The average tenure for a CEO at the company, which was once renowned for grooming executives to run major corporations including Boeing, Home Depot and Honeywell, was almost 14 years prior to Flannery's swift exit. Flannery said he expected the power business to "remain weak through 2020."
Culp was formerly chief executive of the manufacturing group Danaher and was appointed GE's lead independent director in June this year. Its close touched a nine-year low "as recently as last Tuesday, while the Dow Jones Industrial Average has rallied 20.5 percent", noted the market news site.