General Electric has booted out its chairman and chief executive, John Flannery, after a little more a year on the job, amid declining profits and cash-flow problems. GE Power's current goodwill balance is approximately $23 billion and the goodwill impairment charge is likely to constitute substantially all of this balance.
In Culp, GE is tapping a former head of another industrial company, Danaher Corp (DHR.N).
The shares climbed 15 per cent to US$12.95 in NY premarket trading Monday. "I am excited to get to work".
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.
"GE remains a fundamentally strong company with great businesses and tremendous talent", Culp said in the statement, adding that management will move "with urgency" to executive its plan. The operation has struggled with a downturn in the gas-turbine market.
General Electric's decision Monday to part ways with CEO John Flannery just one year into his tenure came amid a prolonged stock slide that has seen the one-time industrial juggernaut shed market value roughly equal to that of Facebook.
GE's share price suffered under Flannery, falling more than 50 percent since he took over last August.
Flannery replaced Welch successor Immelt, himself pushed out earlier than expected last summer after nearly 16 years at the top.
"We believe the language writing down all of Power's goodwill and recognizing both cash and EPS shortfalls set the stage for re-baselining the company, dividend policy and capital deployment again, with the note that an update is coming in the earnings call". The company has been forced to sell off divisions and lay off employees, a process that accelerated under Flannery. The Dow Jones Industrial Average removed GE from the blue-chip index last June, citing the company's poor performance. He previously served as CEO and president at the conglomerate Danaher between 2000 and 2014. We remain committed to strengthening the balance sheet including deleveraging.