As GE announced he would be replaced by board member and former Danaher CEO Larry Culp, it also disclosed that its power business - a major contributor to the company's declining fortunes - would take a non-cash $23 billion charge to write down the value of goodwill.
Culp, who turned around rival conglomerate Danaher during his 14 years at its helm, will become GE's chairman and chief executive immediately, following a unanimous vote by the company's board of directors.
The shares climbed 8.2 percent to $12.22 in NY premarket trading Monday. 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.
GE's latest woes stem from continued weakness in its power division, which have been a drag on the overall business.
Flannery, promoted from his most recent job as GE's health care division chief last summer, spent more than 30 years at the company. While running business development at GE Corporate, he spearheaded the acquisition of Alstom's power business, which doubled GE's installed power base and strengthened its renewables portfolio.More news: Instant Reaction from Ohio State's 27-26 Win at Penn State
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The group, also listed in London, also told investors it would take a $23 billion non-cash charge for its power business, and its EPS (earnings per share) for 2018 would fall short of its previous guidance. It is a privilege to be asked to lead this iconic company, ' Culp said in the company's statement.
"GE remains a fundamentally strong company with great businesses and tremendous talent", Culp said in a statement. "However, we believe that CEO Culp will, at a minimum, re-baseline the company, drive execution and make long-term decisions that benefit the company and shareholders".
GE, however, has not seen such gains, particularly when it comes to its power business which was hit by problems with its latest generation of gas turbines and posted a $10 billion loss a year ago.
GE has been hobbled by years of poorly timed deals and needless complexity that predate Flannery's tenure as CEO. Analysts warn that GE's financial problems could force the company to cut its dividend again. He previously served as CEO and president at the conglomerate Danaher between 2000 and 2014.
BOSTON - After just over a year and declines on several fronts at General Electric, John Flannery has been ousted as the leader of the century-old company. But shares have dropped almost 54 per cent over the past 12 months, and in June it was kicked out of the Dow Jones Industrial Average after 111 years on the blue-chip index. The shift is historic for a company that defined the phrase "household name."GE traces its roots to Thomas Edison and the invention of the light bulb, and the company grew with the American economy".