A New GE CEO: Science Manufacturer Has Been Struggling, Can a New CEO Fix the Issues?

GE CEO

A new GE CEO has been announced today. GE (NYSE:GE) has replaced John Flannery, only a year into his role.

Stocks have risen 14% in pre-market trading as a result.

GE CEO

GE has been in a crisis for almost twenty years. The company has lost almost half a trillion dollars in market value due to factors such as a downturn in the gas-turbine market, problems with diminishing demand, SEC investigations, and cash-flow shortfalls. 

The share climb today is a much-needed resurgence for the stock. GE has already lost 35% this year, following a drop of 45% in 2017. Stocks have been in turmoil, so much so that the company was expelled this year from the Dow Jones Industrial Average.
Source: Google Finance: GE stock decline over 5 years.

Flannery Out, Culp In

During his tenure, GE CEO Flannery had cut costs and made plans to sell off longtime GE businesses including transportation, healthcare, and lighting all in a bid to transform the company. The focus was to remain on power equipment, renewable energy, and jet engines.

However, he was unanimously voted out of this position by the board, charged with “refashioning the conglomerate.”

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Mr. Flannery is to be succeeded as both GE CEO and chairman by H. Lawrence Culp Jr, who is highly credited on Wall Street with turning around Danaher Corporation when he served as CEO there. Danaher Corporation is a conglomerate that makes scientific, medical, and automotive products.

Under his leadership, the company moved into areas such as dental imaging and water filtration. Culp has been credited with transforming the company for the better and Danaher stock has more than doubled over the last five years. As imagined, expectations are high for his new role as GE CEO.

Source: Google Finance. Danaher Corporation stock growth over 5 years.

According to Melius Research analyst Scott Davis, an outsider could be what this company needs: 

“He’s an outsider and maybe it’s going to take an outsider to come in and fix this thing.”

Moving forward, Mr. Culp believes GE can be rescued as it “remains a fundamentally strong company with great businesses and tremendous talent.”

Can this new GE CEO turn it around? Time will tell.

Featured Image: depositphotos/jetcityimage2

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