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G.E. Ousts Chief Just Over a Year After Picking Him to Lead a Turnaround G.E. Ousts Chief Just Over a Year After Picking Him to Lead a Turnaround
(about 5 hours later)
General Electric has replaced John Flannery, the chief executive chosen just over a year ago to shake up the beleaguered industrial giant.General Electric has replaced John Flannery, the chief executive chosen just over a year ago to shake up the beleaguered industrial giant.
The company said on Monday that Mr. Flannery would be succeeded as both chief executive and chairman by H. Lawrence Culp Jr., the former chief of the Danaher Corporation, a conglomerate that makes a variety of scientific, medical and automotive products. G.E. also announced that it would fall short of profit forecasts for this year.The company said on Monday that Mr. Flannery would be succeeded as both chief executive and chairman by H. Lawrence Culp Jr., the former chief of the Danaher Corporation, a conglomerate that makes a variety of scientific, medical and automotive products. G.E. also announced that it would fall short of profit forecasts for this year.
G.E., which said the change was approved by a unanimous vote of its board, said it was facing “weaker performance” in its power generator business.G.E., which said the change was approved by a unanimous vote of its board, said it was facing “weaker performance” in its power generator business.
Mr. Culp said in a news release that, “G.E. remains a fundamentally strong company with great businesses and tremendous talent.” Mr. Culp said in a news release that “G.E. 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,” he added.“We will be working very hard in the coming weeks to drive superior execution, and we will move with urgency,” he added.
[Read more about the changes Mr. Flannery had proposed to streamline G.E.][Read more about the changes Mr. Flannery had proposed to streamline G.E.]
Following the announcement, G.E. shares rose nearly 14 percent in premarket trading. I’s a slight reversal from a steady erosion over the last year, last year, falling from $24 a share last October to Friday’s close to After the announcement, G.E. shares rose nearly 14 percent in premarket trading. It was a slight reversal from a steady erosion over the last year.
Mr. Flannery was in the job for a little more than a year, following Jeffrey R. Immelt. He has served over 30 years with the company, and was charged with refashioning the conglomerate. Last summer, he said the iconic industrial giant would focus on three operations: jet engines, electric power generators and wind turbines.Mr. Flannery was in the job for a little more than a year, following Jeffrey R. Immelt. He has served over 30 years with the company, and was charged with refashioning the conglomerate. Last summer, he said the iconic industrial giant would focus on three operations: jet engines, electric power generators and wind turbines.
Those divisions provided 60 percent of the company’s $122 billion in revenue last year.Those divisions provided 60 percent of the company’s $122 billion in revenue last year.
His plans included spinning off G.E.’s health care business and selling its multibillion-dollar stake in Baker Hughes, a major producer of oil field equipment. It also announced it would shed its division that manufactured railroad locomotives.His plans included spinning off G.E.’s health care business and selling its multibillion-dollar stake in Baker Hughes, a major producer of oil field equipment. It also announced it would shed its division that manufactured railroad locomotives.
In November, to help save some money, G.E. cut its dividend, only the second time it had done so since the Great Depression.In November, to help save some money, G.E. cut its dividend, only the second time it had done so since the Great Depression.
Among the shrinking was a sign of the company’s smaller profile on the American corporate scene: last summer G.E’s stock was officially dropped from the Dow Jones industrial average. It had been listed in the index since 1896. Among the shrinking was a sign of the company’s smaller profile on the American corporate scene: Last summer G.E.’s stock was officially dropped from the Dow Jones industrial average. It had been listed in the index since 1896.
But amid the strategic plans, the underperforming power unit has plagued the company’s finances for months.But amid the strategic plans, the underperforming power unit has plagued the company’s finances for months.
The power division badly misjudged a decline in demand, far more than its competitors did. The depth of the problem became apparent shortly after Mr. Flannery took over, and he warned that it would take a year or more to fix the business.The power division badly misjudged a decline in demand, far more than its competitors did. The depth of the problem became apparent shortly after Mr. Flannery took over, and he warned that it would take a year or more to fix the business.
The business continued to suffer in the second quarter during which revenue fell 19 percent from a year earlier, to $7.6 billion.The business continued to suffer in the second quarter during which revenue fell 19 percent from a year earlier, to $7.6 billion.