General Electric replaces CEO with outsider; shares soar

(Oct 1): 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 US$23 billion ($31.6 billion) charge to write off goodwill in its power division, primarily from a large 2015 acquisition.

The struggling energy, health and transportation conglomerate also said it would fall short of its forecast for free cash flow and earnings per share for 2018 due to weakness in its power business, something analysts had expected.

GE shares jumped 7% to close at US$12.09 as investors bet that Culp could re-energise the GE brand and more quickly transform its portfolio. The stock was the top percentage gainer on the S&P 500. The shares had more than halved since Flannery, a three-decade GE veteran, became CEO in August 2017 to replace Jeff Immelt, who had led GE since 2001. With a market capitalisation below US$100 billion as of Friday, GE was worth less than a fifth of its peak value a generation ago.

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