Published: Mon, October 01, 2018
Money | By Armando Alvarado

GE Abruptly Fires CEO John Flannery, Appoints Lawrence Culp as Chief Executive

GE Abruptly Fires CEO John Flannery, Appoints Lawrence Culp as Chief Executive

General Electric, one of America's most important companies, has shocked Wall Street by replacing John Flannery, its chairman and chief executive, after just over a year in the job.

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

In addition to announcing the executive shakeup, GE also said on Monday that its power business has been performing worse than anticipated and will not hit its 2018 cash flow and earnings guidance.

The shares climbed 15 per cent to US$12.95 in NY premarket trading Monday. Company shares are on pace for their largest single-day percentage increase since March 2009.

GE Power's falling profits past year forced GE to slash its overall profit outlook and cut its dividend for only the second time since the Great Depression.

The Boston-based company's shares closed at $11.29 on Friday, with a total market capitalization of about $98 billion.

Analysts polled by Bloomberg have a $15 price target for GE - 15% above where shares were set to open Monday. "It is a privilege to lead this iconic company". GE, scheduled to report results on October 25, declined to comment.

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"We remain committed to strengthening the balance sheet".

Culp, 55, a board member since April, succeeds John Flannery.

GE also said it will take an impairment charge constituting almost all of the $23 billion of goodwill associated with its power segment, which has struggled with a downturn in the gas-turbine market. Horton also joined GE's board this year.

Flannery faced a titanic task in redirecting General Electric, which was founded in 1892 in Schenectady, New York.

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.

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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