General Electric announced early this morning that its board of directors has voted unanimously to name H. Lawrence Culp Jr. chairman and chief executive officer of the Boston-based company, "effective immediately".
GE shares jumped as much as 16 percent, but later pared some of the gains to trade up 9.5 percent at 11:30 a.m.in NY.
The challenges GE faces - including the power sector's cyclical, structural and operational challenges - are not easily or quickly fixable, but "GE should be commended for selecting a credible, seasoned GE outsider as chairman/CEO who is likely to more candidly and quickly identify how bad things may be and what needs to be done about it", said Gautam Khanna, an analyst at Cowen Inc., in a note to investors.
CFRA Research analyst Jim Corridore said it was probably positive that GE had tapped an outsider to lead the company instead of another company veteran as Flannery had been.More news: Seahawks Star Flips Bird to Own Bench After Breaking Leg in Game
Despite this, GE's share price continued to.
The company said it would fall short of its previously indicated guidance for free cash flow and earnings per share for 2018 due to weakness within GE Power, despite 'GE's businesses other than Power generally performing consistently with previous guidance'.
General Electric shares had declined almost 56 percent since Flannery took over as CEO with a mandate to cut costs and refocus the company on its profitable segments.
Last week the company's market value fell below $100 billion for the first time since March 2009.More news: US, Canada in last-minute NAFTA deal
Flannery's departure from GE is driven by "slow pace of change" under his leadership, CNBC reported. The growth of wind and solar plants has cut into global demand for thermal plants; as one of the world's largest manufacturers and servicers of turbines for electrical generation, GE has been hard hit by that trend.
General Electric head John Flannery is out after just more than a year at the top of the company. "GE is bloated and its culture is destroyed". That will leave it focused on areas such as jet engines, power plants and renewable energy. The company was expelled this year from the Dow Jones Industrial Average.
GE said the power division's goodwill balance is about US$23 billion and the impairment charge would eliminate most of it.
"I think we've been quite clear about where we have underperformed and how we fix that". We have a lot of work ahead of us to unlock the value of GE.More news: Tweet storm: Musk quits as chairman over false claims
"Of course, GE is in a very different starting position than Danaher at the time with GE's Power, balance sheet and cash challenges", Winoker said.