(CNN) – Flannery was replaced Monday by Larry Culp, a respected outsider who formerly led the industrial manufacturing company Danaher (DHR). GE installed Thomas Horton, the former CEO of American Airlines, as its lead director.
GE has been hobbled by years of poorly timed deals and needless complexity that predate Flannery’s tenure as CEO. Flannery launched a turnaround plan this year that would narrowly focus GE on aviation and power, but the makeover failed to instill confidence in investors.
As it announced the leadership changes, GE revealed more bleak financial news: The conglomerate warned that its 2018 profit will “fall short” of guidance because of “weaker performance” at its struggling power division.
GE further warned it will take an impairment charge related to GE Power. The company said the charge, which is still being finalized, will likely total nearly $23 billion.
“GE remains a fundamentally strong company with great businesses and tremendous talent. It is a privilege to be asked to lead this iconic company,” Culp, who joined GE’s board earlier this year, said in a statement. “We will be working very hard in the coming weeks to drive superior execution, and we will move with urgency.”
The stock jumped 14% as Wall Street cheered the leadership change.
“We hold Mr. Culp in the highest regard” given his “operational and strategic excellence” at Danaher, RBC analyst Deane Dray recently wrote to clients.
Culp, 55, is credited with leading a turnaround at Danaher, which makes everything from dental tools to consumer packaging. GE said that during Culp’s 14-year tenure, Danaher’s sales increased fivefold and the stock price raced ahead of the S&P 500.
In other words, exactly the opposite of the situation at GE. Despite the strong economy and booming stock market, GE’s stock price has crashed by nearly two-thirds since the end of 2016. Longtime CEO Jeff Immelt was replaced by Flannery, a 30-year GE veteran, in August 2017.
To pay off debt and jump-start the stock, Flannery announced plans to sell many of GE’s businesses, including its century-old railroad division, Thomas Edison’s light-bulb unit, Baker Hughes (BHGE) and the health-care unit that makes MRI machines.