Jeff Immelt stepping down as CEO of GE

Jun 13, 2017, 10:46
Jeff Immelt stepping down as CEO of GE

General Electric announced Monday morning that CEO and Chairman Jeff Immelt is stepping down from his role at the company. Immelt concluded that, in the wake of the financial crisis, holding a financial services giant would be a drag on profitability, given heavier federal regulation of the finance sector.

Although not detailing specific plans, Flannery did say digital will be at the heart of GE's strategy. The company was co-founded by Thomas Edison, the inventor of the light bulb. Just like Goldman Sachs and Bank of America, it took a lot of time to stabilize the goldmine and restore the confidence of tired customers and investors.

Flannery has helped turn around GE's healthcare business, increasing organic revenue by 5 percent and margins by 100 basis points in 2016, GE said in a statement.

GE almost doubled its industrial profit during Mr Immelt's tenure and returned $143billion to investors in dividends, more than in the entire prior history of the company. The company acquired the power business of France's Alstom three years ago.

The shares have fallen about 30 per cent since Mr Immelt took over as he faced criticism for cutting the dividend in 2009 and paying too much for some acquisitions.

"His background in the Capital side may mean that he can bring some financial discipline to the CEO role", says Credit Suisse's Julian Mitchell, adding that Flannery managed to boost sales and profit in numerous regions where he worked. "The board is confident that in the years to come, GE investors and employees will benefit from Jeff's hard work". "We're in an incredible position to go forward".

Yet investors were unimpressed.

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There had been great expectations when Immelt, 61, replaced the legendary Jack Welch as CEO back in 2001.

The company's shares were up 3.6 percent in premarket trading. GE's current market cap is $251.3 billion. With Flannery set to take the reins of the Fortune 500 company, people want to know more about the new CEO.

Flannery described the promotion as "the greatest honor" of his career and promised to lead GE into a new era. The investment was worth about $2.5 billion, with Peltz saying at the time that the company's stock was "undervalued and underappreciated" and could be transformed to "allow its world-class industrial businesses to drive attractive shareholder returns". "That's clearly a strong signal to the market where they think an important part of their future lies".

With Immelt at the helm, GE announced early last year it would abandon it's 42-year-old headquarters in Fairfield, opting to move the company to Boston. He also bought a home in Boston's Back Bay neighborhood past year, the Boston Globe reported.

John Flannery with Immelt.

GE has recently faced pressure from activist investor Trian Fund Management to cut costs and make other changes.

The leadership changes have been detailed in a plan by GE Board of Directors for years, the company said.

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