NEW YORK (Reuters) – While John Flannery’s tenure at the helm of General Electric (GE.N) was far shorter than that of his predecessor Jeff Immelt, the two former chiefs have one thing in common: They both presided over a sharp drop in GE shares.
The U.S. industrial conglomerate on Monday ousted Flannery as chief executive officer in a surprise move, replacing him with outsider and board member Larry Culp.
In Culp, GE is tapping a former head of another industrial company, Danaher Corp (DHR.N). Culp led Danaher from 2000 to 2014, helping grow an industrial company into a broader conglomerate through a series of acquisitions, while growing earnings.
Danaher’s stock soared over that time and prospered while GE’s has struggled.
Flannery’s departure comes as he was trying to turn around GE, including through a series of major planned divestitures from the sprawling company.
GE has continued to struggle, including with a recent issue with problems with turbines in its important power unit.
GE’s share price suffered under Flannery, falling more than 50 percent since he took over last August. Under Immelt, GE’s shares lost more than a third of their value.
GE’s valuation, based on price-to-earnings ratios, also has declined, making the shares far cheaper than those of rival diversified industrial companies. The stock was up nearly 9 percent to $12.29 in Monday trading after the CEO announcement.
“Investors grew impatient with the lack of improvement and with the sheer scale of the problems uncovered; however, these problems were not created under his tenure,” CFRA Research analyst Jim Corridore said in a note.
Indeed, GE’s revenue and profit has declined over the years, in part as GE has pulled back from finance and other businesses. And in recent days the company’s market value slipped below $100 billion after approaching $600 billion about 18 years ago.
Reporting by Lewis Krauskopf; Editing by Nick Zieminski