GE’s Flannery steps down as CEO, shares jump 15pc

General Electric replaces CEO with outsider shares soar

General Electric Co Chief Executive Officer John Flannery abruptly stepped down today just over a year after taking the role, and the company announced a US$23 billion (RM95.2 billion) charge related to its struggling power business.

The conglomerate on Monday announced that it has removed former CEO and chairman John Flannery, replacing him with Lawrence Culp, effective immediately.

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.

GE has lost roughly $US500 billion in market value since August 2000, including a almost 30% hit to its stock price this year alone.

Flannery, promoted from his most recent job as GE's health care division chief last summer, spent more than 30 years at the company. Currently, the goodwill balance of GE Power is about $23 million. The Wall Street Journal, quoting sources familiar with the situation, said Culp is expected to continue with the company's plan to spin off its healthcare business and sell two other units.

"We will be working very hard in the coming weeks to drive superior execution, and we will move with urgency, " Culp said in the statement.

Flannery had been overseeing substantial re-organisation plans at the 126-year-old firm, which have now been thrown into jeopardy.

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The division's outlook appeared to worsen last month when GE said several power plants equipped with its newest turbines had to be shut down because of a part failure.

GE gave no explanation for Flannery's abrupt removal but CNBC reported it was "driven by the board's frustration with the slow pace of change under his leadership". "I am excited to get to work". Analysts warn that GE's financial problems could force the company to cut its dividend again.

Culp has won praise for transforming industrial conglomerate Danaher and is seen as bringing that experience to GE, which has been floundering for two years.

Culp, the first outsider to be named chief executive of GE, led a turnaround at Danaher, where sales increased fivefold during his 14-year tenure.

Flannery had hoped to turn the flailing company around by focusing on aviation and power, but the makeover failed to instill confidence in investors in the short time it had to work.

A slimmed down General Electric - a 126-year-old conglomerate that was once the most valuable USA corporation and a global symbol of American business power - will focus on jet engines, power plants and renewable energy. But shares have dropped almost 54 per cent over the past 12 months, and in June it was kicked out of the Dow Jones Industrial Average after 111 years on the blue-chip index.

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