GE CEO Flannery Removed as Losses Increase

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Electric auto giant Tesla Inc (NASDAQ:TSLA) was also in the news at the weekend due to a change in the management structure.

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

Larry Culp, who becomes chairman and chief executive, oversaw a dramatic recovery at Danaher, another large manufacturer, while Tom Horton, who joins as senior director, restored the fortunes of American Airlines.

"While GE's businesses other than Power are generally performing consistently with previous guidance, due to weaker performance in the GE Power business, the Company will fall short of previously indicated guidance for free cash flow and EPS for 2018", the release said.

That same day, Flannery said GE might take the radical step of splitting up the main company's three main businesses- aviation, health care and power - into separate entities. The company said that the goodwill impairment charge is likely to constitute all of this balance. The aircraft engine business, where the company is dominant in both narrow- and wide-body engines, is GE's crown jewel. Culp led Danaher from 2000 to 2014, helping grow an industrial company into a broader conglomerate through a series of acquisitions, while growing earnings. "However, we believe that CEO Culp will, at a minimum, re-baseline the company, drive execution and make long-term decisions that benefit the company and shareholders". "Tom and I will work with our board colleagues on opportunities for continued board renewal", he said. With a market capitalization below $100 billion as of Friday, GE was worth less than a third of its value in 2007.

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The stock jump is a sign from Wall Street "that Flannery's leadership was not providing enough value - and that the market expects Culp to be better suited for the top position", said Tim Hubbard, assistant professor of management in the University of Notre Dame's Mendoza College of Business. Lawrence Culp Jr. will take over as chairman and CEO immediately.

Flannery's departure underscores the slow pace of his efforts to turn around GE. On behalf of the board, I thank John for his significant contributions and long service to GE.

"We are not sure if this news implies a radically different strategic plan than the one announced in June, given Mr. Culp's involvement at the time". In the case of GE, the news proved to be overwhelmingly positive. It was replaced by the parent company of the Walgreens pharmacy chain. Of course, our partners at Trade Ideas were the first to alert us to the gains.

GE's share price suffered under Flannery, falling more than 50 percent since he took over last August.

Moving forward, the CNA Finance team will continue to keep a close eye on GE. Start finding winning trades in minutes with Trade Ideas!

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