General Electric: John Flannery removed as CEO

General Electric Chairman & CEO John Flannery is interviewed on the floor of the New York Stock Exchange.AP/Richard Drew

General Electric head John Flannery is out after just more than a year at the top of the company. He will be replaced as chairman and CEO by H. Lawrence Culp, Jr., who served as CEO and president of Danaher Corporation from 2000 to 2014. Culp has been a GE board member since April. GE shares are up more than 15% on the news. 

GE said it will take a $23 billion goodwill charge for its power business. “GE expects to take a non-cash goodwill impairment charge related to the GE Power business,” the release said. “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 its second-quarter earnings report, the company said profit from its power business dropped 58%, but was able to match expectations with solid earnings growth in its aviation and healthcare businesses. Flannery said he expected the power business to “remain weak through 2020.” 

The conglomerate also warned that it will miss its 2018 earnings-per-share guidance. In July, the company reiterated it expected to see adjusted EPS of $1 to $1.07 a share. 

“While GE’s businesses other than Power are generally performing consistently with previous guidance, due to weaker performance in the GE Power business, the Company will fall short of previously indicated guidance for free cash flow and EPS for 2018,” the release said. 

GE’s stock had fallen more than 35% this year through Friday.

This story is developing…

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