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

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

The company has recruited two renowned turnaround experts to replace Mr Flannery. It is a privilege to be asked to lead this iconic company. On behalf of the board, I thank John for his significant contributions and long service to GE. The board looks forward to working with Larry and his team to return GE to growth and long-term success. "I am excited to get to work".

The shares climbed 15 per cent to US$12.95 in NY premarket trading Monday.

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. GE also said it will take a non-cash goodwill impairment charge of "substantially all" of GE Power's current goodwill balance of about $23 billion. Other divisions are on track, the company said in a statement today.

"Third-quarter likely a "hard" EPS reset".

Larry Culp, who is highly respected on Wall Street for transforming manufacturer Danaher Corp., takes over immediately, GE said in a statement Monday. Those included the purchase of French gas-turbine maker Alstom, which GE bought in 2015 for more than $14 billion. GE had fallen 35 percent this year through Friday, following a 45 percent decline in 2017.

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Apple became the first US-based company to reach $1 trillion in valuation in August, according to CNBC. So, by putting an end to Flannery's almost 2 year tennure at the company and bringing a trusted leader on board to replace him, the company has excited investors. Immelt took over from Welch two days before the terrorist attacks in NY and Washington on September 11, 2001.

The board's move comes in a little more than a year after it appointed Flannery as GE's chief executive. Thomas Horton was named lead director. He has already pledged to sell or spin off longtime GE businesses including transportation, health care and lighting while focusing on power equipment, renewable energy and jet engines. But investors seemed unimpressed, and the stock kept falling even as US markets notched records. And in recent days the company's market value slipped below $100 billion after approaching $600 billion about 18 years ago.

What will Culp do next?

He previously served as CEO and president at the conglomerate Danaher between 2000 and 2014.

Culp may also "re-baseline" the company, UBS analyst Steven Winoker, said in a note.

GE has famously paid a dividend every year since the Great Depression. Capital allocation can include decisions like stock buybacks, acquisitions, and research and development spending. Culp specifically cited improving GE's balance sheet and reduce its debt load, but acknowledged that he and his team "have a lot of work ahead of us".

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