GE shares surge after company dumps Flannery as CEO, takes $23 billion charge for power business

General Electric removed John Flannery as CEO on Monday and installed Lawrence Culp as Chairman and CEO.

GE also said it will take a $23 billion non-cash charge for its power business and said it "will fall short of previously indicated guidance for free cash flow and EPS for 2018."

"GE Power's current goodwill balance is approximately $23 billion and the goodwill impairment charge is likely to constitute substantially all of this balance," the release said. "The impairment charge is not yet finalized and remains subject to review."

GE shares surged 9 percent to $12.30 in premarket trading Monday on the news. The stock posted one of its worst weeks of 2018 last week, down 7 percent, and hit a new 9-year low of $11.21.

This story is developing. Please check back for updates.

Read full press release from GE here:

H. LAWRENCE CULP, JR. NAMED CHAIRMAN AND CEO OF GE
GE Power business outlook declines, leading to shortfall relative to 2018 guidance; Company to take non-cash impairment charge related to GE Power

Thomas W. Horton appointed as Lead Director

BOSTON – October 1, 2018 – GE (NYSE: GE) announced today that H. Lawrence Culp, Jr. has been named Chairman and Chief Executive Officer of the Company by a unanimous vote of the GE Board of Directors, effective immediately. Additionally, the GE Board has appointed Thomas W. Horton as Lead Director. Mr. Culp and Mr. Horton have been members of the Board since April 2018. Mr. Culp will succeed John Flannery as Chairman and CEO.

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. In addition, GE expects to take a non-cash goodwill impairment charge related to the GE Power business. GE Power's current goodwill balance is approximately $23 billion and the goodwill impairment charge is likely to constitute substantially all of this balance. The impairment charge is not yet finalized and remains subject to review. The Company will provide additional commentary when it reports third quarter results.

Mr. Culp said, "GE remains a fundamentally strong company with great businesses and tremendous talent. It is a privilege to be asked to lead this iconic company. We will be working very hard in the coming weeks to drive superior execution, and we will move with urgency. We remain committed to strengthening the balance sheet including deleveraging. Tom and I will work with our board colleagues on opportunities for continued board renewal. We have a lot of work ahead of us to unlock the value of GE. I am excited to get to work."

Mr. Horton said, "Larry Culp has a proven track record in company transformation and delivering shareholder value. He is a strong leader with deep knowledge of industrials and technology, and an intense focus on execution, organization, and talent development. The board looks forward to working with Larry and his team to return GE to growth and long-term success. On behalf of the board, I thank John for his significant contributions and long service to GE."

Mr. Culp, 55, served as Chief Executive Officer and President of Danaher Corporation from 2000 to 2014. During his tenure he led the highly successful transformation of the company from an industrial manufacturer into a leading science and technology company. Under Mr. Culp's leadership, Danaher executed a disciplined capital allocation approach, including a series of strategic acquisitions and dispositions, a focus on investing for high-impact organic growth and margin expansion, and delivering strong free cash flow to drive long-term shareholder value. During his 14 years at the head of Danaher, the company's market capitalization and revenues grew five-fold.

Thomas W. Horton, 57, served as Chairman and Chief Executive Officer of American Airlines from 2011 to 2013, and Chairman of American Airlines Group from 2013 to 2014. During his tenure he led the successful restructuring of the airline and its eventual merger with US Airways, creating the world's largest airline. In addition to a deep knowledge of the aviation industry, Mr. Horton brings strong financial skills and corporate governance experience to the board, having served earlier in his career as the Chief Financial Officer of American Airlines and AT&T Corporation.

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