General Electric replaces CEO with outsider, shares soar

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 $23-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 10.2 percent to $12.44 as investors bet Culp could re-energize the GE brand and more quickly transform its portfolio. They were the top percent gainer on the S&P 500 , set for their best day since March 2009, but still far lagging the S&P this year. 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 capitalization below $100 billion as of Friday, GE was worth less than a fifth of its peak value a generation ago.

GE Power’s falling profits last year forced GE to slash its overall profit outlook and cut its dividend for only the second time since the Great Depression.

GE’s board, meeting in the last few days, unanimously picked H. Lawrence Culp Jr as its new CEO. Culp, 55, who was named to GE’s board in February, was CEO of Danaher Corp from 2000 to 2014, helping grow an industrial company into a broader conglomerate through a series of acquisitions, while growing earnings. (RTRS)