General Electric stock pops on news of CEO’s exit

When General Electric Chief Executive John Flannery said this summer that “everything’s on the table” to revitalize the company, little did he know his job would be on the list.

That became clear on Monday as the board of the once-mammoth industrial conglomerate ousted Flannery — just 14 months after he took the reins from longtime CEO Jeff Immelt.

During Flannery’s tenure, GE shares tumbled 61 percent — while the S&P 500 gained 20 percent.

Larry Culp, the former Danaher chief executive who joined GE’s board in April, is replacing Flannery as chairman and CEO.

Flannery’s exit was met with surprise and celebration on Wall Street.

GE shares, which were trading around $11 — near levels last seen during the financial crisis — popped 7.1 percent on the news of Flannery’s ouster, to $12.09.

Although Flannery, a 30-year GE veteran, moved quickly to slash costs after taking the reins in August 2017, the board wanted him to quicken his pace, according to a source.

One of Flannery’s cost-cutting measures was grounding GE’s fleet of corporate jets.

More cuts followed, with GE, under activist attack by Nelson Peltz’s Trian Fund, shrinking its board from 18 to 12 members.

“Everything’s on the table, with no preconceptions and no sacred cows,” Flannery said in a June Wall Street Journal interview in which he discussed plans to shed the company’s health care and oil businesses.

Wall Street wasn’t placated.

Meanwhile, revenue in GE’s Power division, it’s largest, slumped 15 percent in the first half of 2018 — while segment profits shriveled by 52 percent.

Adding insult to financial injury, it was announced in June that GE would be dropped from the Dow Jones industrial average.

The “change to the DJIA will make the index a better measure of the economy and the stock market,” David Blitzer, chairman of the index committee at S&P Dow Jones Indices, said at the time, further illustrating the once-shining conglomerate’s increasing irrelevance.

Whispers of Culp eventually taking the helm at GE circulated almost as soon as he joined the board in April.

At The Deal’s 2018 Corporate Governance Conference in June, activist investor Peltz, whose Trian Fund has a seat on GE’s board, was asked about Culp’s prospects.

“John Flannery is running the company,” Peltz said flatly.

In addition to announcing Culp’s ascension to the top spot, GE also said Monday that it may take a $23 billion goodwill impairment charge tied to its GE Power business and that it was going to miss its guidance targets.

Analysts noted that despite the seemingly good news, GE still has its work cut out for it.

“I ‘heart’ Larry Culp, but a large amount of wood to chop,” JPMorgan analyst Stephen Tusa said in a note Monday.

“A change of this magnitude at this point, with no real details and no conference call, is negative, in our view,” he added.

Culp, for his part, tried to sound optimistic.

“It is a privilege to be asked to lead this iconic company,” Culp said in a statement Monday. “I am excited to get to work.”