General Electric Co. soared after ousting John Flannery a little more than a year into his tenure as chief executive officer, replacing him with a renowned turnaround expert.
GE Power's current goodwill balance is about $23 billion and the goodwill impairment charge is likely to constitute substantially all of this balance, the company said, though cautioning the charge is not finalized and subject to further review.
"Investors will view the change favorably given Culp's successful CEO tenure at Danaher, his GE "outsider" status, and the fact that Culp doesn't "need" the position, having already completed a lucrative & reputable career".
The company's power business, hit by problems with its latest generation of gas turbines, posted a $10 billion loss previous year. It is a privilege to be asked to lead this iconic company, ' Culp said in the company's statement. "I am excited to get to work". The operation has struggled with a downturn in the gas-turbine market. GE had fallen 35 percent this year through Friday, following a 45 percent decline in 2017. So, by putting an end to Flannery's almost 2 year tennure at the company and bringing a trusted leader on board to replace him, the company has excited investors.
Deal volume topped US$22 billion during Culp's 14 years at the head of the company, with his biggest move being the 2011 acquisition of diagnostic-equipment maker Beckman Coulter Inc. for US$6.8 billion. Just six months after taking over, GE was forced to pay $15 billion to make up for miscalculations at a remaining insurance divisions, catching Wall Street off guard.
On Monday, the firm said it expected to write down $23bn in impairment charges on its power division.
Flannery's departure from GE is driven by "slow pace of change" under his leadership, CNBC reported, citing a text from a source.
Larry Culp, who becomes chairman and chief executive, oversaw a dramatic recovery at Danaher, another large manufacturer, while Tom Horton, who joins as senior director, restored the fortunes of American Airlines. And in recent days the company's market value slipped below $100 billion after approaching $600 billion about 18 years ago.
It remains committed to its spin-off strategy, he added. He previously served as CEO and president at the conglomerate Danaher between 2000 and 2014. "We will be working very hard in the coming weeks to drive superior execution, and we will move with urgency", Culp said.