General Electric on Monday removed John Flannery as CEO after only a year on the job, apparently reflecting the board's loss of confidence in his ability to dig the troubled conglomerate out of a severe slump. Longtime CEO Jeff Immelt was replaced by Flannery, a 30-year GE veteran, in August 2017.
However, as Flannery has restructured the multinational conglomerate, its value has dipped below $100 billion and shares are down more than 35% this year.
The company said because of weaker performance in the GE Power business, GE would fall short of previous profit guidance for this year.
GE's board voted unanimously to elect Lawrence Culp, the former CEO of Danaher Corp.
GE shares rose 15 percent before the opening bell.
"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.
The broad strategies are likely to be similar because the plan laid out by Flannery was made in conjunction with heavy involvement from the board, which included Culp, said Gabelli & Co analyst Justin Bergner.
The shares climbed 15 per cent to US$12.95 in NY premarket trading Monday.
Despite this, GE's share price continued to.
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But GE's Power unit, which sells and services gas turbines, has been an anchor around the company's neck of late, and the Renewable Energy division has also come under pressure amid aggressive pricing in the global wind turbine market.
Mr Flannery's departure from GE is driven by "slow pace of change" under his leadership, CNBC reported, citing a text from a source.
The division's outlook appeared to worsen last month when GE said several power plants equipped with its newest turbines had to be shut down because of a part failure.
"We believe the language writing down all of Power's goodwill and recognizing both cash and EPS shortfalls set the stage for re-baselining the company, dividend policy and capital deployment again, with the note that an update is coming in the earnings call".
In June, GE lost its spot in the blue-chip Dow Jones Industrial Average after over a century.
Whispers of Culp eventually taking the helm at GE circulated nearly as soon as he joined the board in April.
"If I'm a GE employee today, I'm happy for the turnaround, but expectations are about to get a whole lot higher.GE employees will either step up or will be replaced", Davis said.
Culp said in a statement, "We will move with urgency".
"Investors grew impatient with the lack of improvement and with the sheer scale of the problems uncovered", CRA Research analyst Jim Corridore wrote to clients. The company said on Monday that it would absorb a goodwill charge of up to $US23 billion for the power segment.