General Electric removes John Flannery as CEO, says it will take a $23 billion charge to its power business

  • General Electric head John Flannery is out.
  • He will be replaced by H. Lawrence Culp, Jr.
  • GE also said it would take a $US23 billion charge for its power business and that it will miss its full-year earnings guidance.
  • GE shares are up more than 15% on the news.
  • Watch General Electric trade in real time here.

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 $US23 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 $US23 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 $US1 to $US1.07 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.

Flannery spent more than 30 years at GE. He worked for two decades in financial services before running GE’s business in India and eventually leading GE Healthcare.

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

This story is developing…

NOW WATCH: Money & Markets videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.