by Thomas Dworetzky
, Contributing Reporter | October 01, 2018
As the GE Power business outlook dives, the ailing industrial giant unexpectedly announced that CEO John Flannery is out after just over a year, and that H. Lawrence Culp Jr. is its new chairman and chief executive officer.
Culp was CEO of Danaher Corporation from 2000 to 2014 and is credited with a “highly successful transformation of the company from an industrial manufacturer into a leading science and technology company,” according to GE.
The GE board also appointed Thomas W. Horton as lead director. He was chairman and CEO of American Airlines from 2011 to 2013, and chairman of American Airlines Group from 2013 to 2014.
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The company also announced that while other parts of the company are in line with earlier guidance, plans now call for a non-cash goodwill impairment charge related to the GE Power business – essentially wiping out a $23 billion goodwill balance.
“GE remains a fundamentally strong company with great businesses and tremendous talent,” said Culp in a statement, adding that he and leadership “remain committed to strengthening the balance sheet, including deleveraging.”
The new CEO earned praise from Horton, who stated that “Larry Culp has a proven track record in company transformation and delivering shareholder value. He is a strong leader with deep knowledge of industrials and technology, and an intense focus on execution, organization, and talent development. The board looks forward to working with Larry and his team to return GE to growth and long-term success. On behalf of the board, I thank John for his significant contributions and long service to GE.”
The move caused GE stock to rise, and has been met with support and praise by outsiders.
"We hold Mr. Culp in the highest regard" given his "operational and strategic excellence" at Danaher, RBC analyst Deane Dray recently wrote to clients, according to CNN-Money
GE has been hammered by the market. Since Flannery took the CEO reins from Jeffrey Immelt on August 1, 2017, its shares have plunged 55.6 percent through Friday, according to MarketWatch
. Its close touched a nine-year low “as recently as last Tuesday, while the Dow Jones Industrial Average has rallied 20.5 percent,” noted the market news site.
GE, an original member of the Dow since 1896, was dropped from the index last summer.