GE shares soar as CEO pays price for 'slow pace' of shake-up

GE shares soar as CEO pays price for 'slow pace' of shake-up

GE shares soar as CEO pays price for 'slow pace' of shake-up

General Electric Co ousted Chief Executive Officer John Flannery in a surprise move on Monday, replacing him with outsider and board member Larry Culp, and said it would take a roughly $23-billion charge to write off goodwill in its power division, primarily from a large 2015 acquisition.

General Electric (GE) announced H. Lawrence Culp, Jr. will replace John Flannery as Chairman and CEO of the company, effective immediately. In pre-market trading, GE's shares are up 14.4% to $12.92.

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.

Last week, GE shares reached a nine-year low following a 10 percent drop after news of a glitch in new power-plant turbine technology that temporarily shut two electricity plants in Texas.

The company also announced that the Power division may take a $23 billion "goodwill impairment charge", a mechanism whereby companies settle the differences between the actual value of assets and the premium paid to acquire them.

MarketWatch said he inherited the mistakes of his predecessor, including the $17 billion purchase of France's Alstom power business, and "paid the price for not cleaning up someone else's mess fast enough".

The company said it would miss its 2018 profit forecast because of "weaker performance" in its power business.

In a statement, Culp called his new position a "privilege" and said that he plans to "move with urgency" to address the company's woes.

"GE remains a fundamentally strong company with great businesses and tremendous talent, " Culp said Monday in a statement. "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".

General Electric Chief Executive Officer John Flannery presents the company's new strategy and financial targets to investors at a meeting in NY, U.S., November 13, 2017.

The profit disappointment and massive accounting writedown are just the latest in a long line of misses dating back to the leadership of Jeff Immelt, who led GE between 2001 and June of previous year.

Culp was formerly chief executive of the manufacturing group Danaher and was appointed GE's lead independent director in June this year. He previously served as CEO and president at the conglomerate Danaher between 2000 and 2014. Culp was named to the GE board earlier this year.

GE has been hobbled by years of poorly timed deals and needless complexity that predate Flannery's tenure as CEO.

The hits keep coming for GE, which was removed from the bellwether Dow Jones industrial average over the summer.

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