GE ousts CEO John Flannery after less than 2 years

GE ousts CEO John Flannery after less than 2 years

Flannery was replaced on Monday by Larry Culp, a respected executive who becomes the first outsider to lead GE in the company's 126-year history. Both men had been members of the industrial giant's board since April of this year. The average tenure for a CEO at the company, which was once renowned for grooming executives to run major corporations including Boeing, Home Depot and Honeywell, was almost 14 years prior to Flannery's swift exit.

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.

GE's latest woes stem from continued weakness in its power division, which have been a drag on the overall business. The impairment charge is not yet finalized and remains subject to review. "It is a privilege to lead this iconic company".

"We will be working very hard in the coming weeks to drive superior execution, and we will move with urgency, " Culp said in the statement. The shift is historic for a company that defined the phrase "household name."GE traces its roots to Thomas Edison and the invention of the light bulb, and the company grew with the American economy".

"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 will succeed John Flannery as chairman and CEO.

GE's struggles are well-known, and it's been reflected in its underperforming stock price. Those included the purchase of French gas-turbine maker Alstom, which GE bought in 2015 for more than $14 billion.

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"Everything's on the table, with no preconceptions and no sacred cows", Flannery said in a June Wall Street Journal interview in which he discussed plans to shed the company's health care and oil businesses. While it's unclear yet what actions he will take, given his stated desire to move forward quickly, investors likely won't need to wait too long to see his turnaround plan for the company.

The division's outlook appeared to worsen last month when GE said several power plants equipped with its newest turbines had to be shut down because of a part failure. With a market capitalization below US$100 billion as of Friday, GE was worth less than a fifth of its peak value a generation ago.

Beyond its power disaster, GE is grappling with a dual-pronged SEC investigation into its accounting practices and insurance business. That prompted GE Monday to announce that it will fall short of previous financial guidance for 2018. GE could put it into bankruptcy.

GE's deal making, on the other hand, has destroyed shareholder value.

GE has famously paid a dividend every year since the Great Depression.

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