GE CEO Jeff Immelt to Be Replaced by John Flannery
- Author: Zachary Reyes Jun 14, 2017,
Jun 14, 2017, 12:39
"So it's going to continue the relationship, and I think over time I'll get to know Mr. Flannery and the new team". "He is a strong and courageous leader who can make tough decisions while inspiring his teammates", the company said. "We look forward to working with John Flannery, and the GE team, as he steps into his new role". Today, GE is a high-tech industrial company with a bright future.
"GE may not necessarily need a drastically new message, but it needs a new messenger", said Barclays analyst Scott Davis. "We're in an incredible position to go forward".
Immelt, in the interview, said Flannery has a free hand to do what he wants.
In 2005, he moved to Asia where he was responsible for the Asia Pacific region for GE Capital, and while there, he grew earnings in Japan by 100 percent, in Korea by 30 percent and in Australia by 25 percent.
GE announced Jeff Immelt, CEO of the company for the past 16 years, would step down in August and be replaced by John Flannery, who is president and CEO of the company's health care unit.
Immelt, who took over from the legendary Jack Welch, oversaw major deals such as the 2015 purchase of the power assets of French industrial giant Alstom and a spate of large divestments from GE Capital after the 2008 financial crisis that essentially unloaded what was effectively the fifth biggest United States bank after the financial crisis hit the unit.
Despite investing heavily on developing digital products, from sensors in jet engines to augmented reality software, shareholders have been wary of the company's new direction.
However, since Mr Immelt became CEO in 2001, GE's shares fell 30 per cent, while the S&P 500 index more than doubled.
Immelt's inability to move that stock price, indeed it fell by almost half during his tenure, was thought by many to be his undoing.
After discussions with Trian, GE said it would seek to reduce costs by more than $2 billion in its industrial arm by the end of 2018 and improve profit. In an email Monday, Trian said it had no comment on the leadership change.
The timing was not surprising given the serial underperformance of the stock and "investor fatigue with management's continued perceived ungainly portfolio actions", said Stifel analyst Robert McCarthy. Immelt, however, did refocus the conglomerate on its core manufacturing businesses, selling television broadcaster NBC, the home appliances division and most of its lending operation. The stock has been the worst performing component of the Dow Jones industrial average since Immelt became CEO.
Mr Immelt won widespread praise in 2015 for a plan to sell the bulk of the volatile GE Capital business and closing the Alstom deal amid heavy political pressure in France.
Flannery, 55, has been at GE since 1987 and led the acquisition of Alstom, the largest industrial acquisition in the company's history.
Separately, GE announced the appointment of Kieran Murphy as president and CEO of GE Healthcare, effective immediately.