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giftedviz.com October 17, 2018


GE Chief Out After Barely A Year On The Job

03 October 2018, 10:42 | Rodolfo Wallace

GE chairman out after less than 2 years General Electric

GE chairman out after less than 2 years

General Electric, mired in a deep slump, has ousted CEO John Flannery after barely a year on the job.

Tusa added that GE shares tend to outperform on the day of major news events that "change the narrative" on sentiment such as the June 2018 news of plans to separate GE's health-care business and cut debt, as well as the resignation of former CEO Jeff Immelt in June 2017.

GE has endured a hard year in which it has lost more than half of its stock market value and been ejected from the Dow Jones Industrial Average after more than a century's membership.

GE warned Monday that it will miss its profit forecasts this year and that it's taking a $23-billion charge.

H. Lawrence Culp, named to the GE board in April, will replace Flannery immediately, the firm said in a statement, following a unanimous decision of the board.

United States stocks are set to head higher at the open, with General Electric Company (NYSE:GE) leading the charge. The company said its businesses other than Power "are generally performing consistently with previous guidance".

The broad strategies are likely to be similar because the plan laid out by Mr Flannery was made in conjunction with heavy involvement from the board, which included Mr Culp, said Gabelli & Co analyst Justin Bergner. Now (7:57), GE is trading at $12.87 per share after a gain of $1.58 per share or 13.99% thus far today!

The move caused GE stock to rise, and has been met with support and praise by outsiders. GE will also take a charge that will be "substantially all" of the US$23 billion goodwill balance of the power unit.

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Mr Flannery's departure from GE is driven by "slow pace of change" under his leadership, CNBC reported, citing a text from a source.

Analysts noted that despite the seemingly good news, GE still has its work cut out for it. The deal expanded GE's exposure to gas, coal and nuclear power.

"I think what (Culp) will bring is sort of external mindset into the organization and particularly the ability to run a decentralized company very effectively, given that was sort of the way in which things were done at Danaher".

In June, GE was removed from the Dow Jones Industrial Average, an index it had included in since 1896.

"Investors grew impatient with the lack of improvement and with the sheer scale of the problems uncovered", CRA Research analyst Jim Corridore wrote to clients. "The market seems to be welcoming a change in leadership but the new CEO will be facing numerous same problems".

Culp said in a statement, "We will move with urgency".

A goodwill impairment charge is a write-off used to balance a company's books when the recorded value of an asset or liability is determined to be greater than the fair value, according to Investopedia.



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