GE's new CEO to review portfolio 'with no constraint'

Reuters

Reuters

It's worth noting that Immelt also ran GE Healthcare before he was tapped for GE's top post.

Flannery, 55, who started his career with GE Capital 30 years ago, was the head of the conglomerate's Indian operations from 2009 to 2013.

"He made a lot of transformative calls, and, frankly, courageous calls and, I would say, frequently lonely calls", Flannery said.

Current CFO Jeff Bornstein has been promoted to Vice Chair of GE. At the lending unit, he focused on leveraged buyouts and later led the corporate restructuring group. He also worked on shrinking GE Capital and the disposition of GE Appliances, according to GE.

In his view, Flannery's prior experience leading GE's business development team, which seeks out M&A deals, would make him "readily adept at maximizing value and structuring potential exits" - as Flannery did through the 2015 acquisition of Alstom's power and grid business. His announced departure forces attention on a large question that the company has never answered satisfactorily: Why does GE-a sprawling conglomerate that chronically underperforms the market-still exist?

Since Immelt became CEO, GE's shares have declined 30 per cent, while the S&P 500 index more than doubled.

Immelt oversaw a period of consolidation for GE over the best part of two decades, following 20 years of significant growth under the leadership of Jack Welch.

In a sign of continuity, GE said Kieran Murphy, who currently heads life sciences, would lead the wider GE Healthcare division - and the company stated bluntly: "Healthcare is a key GE business now and in the future". The appointment is the result of succession planning that's been under way since 2011, the company said. Immelt spent a good portion of his time at GE downsizing the company, casting off divisions such as the NBC television network and its appliances division, as well as numerous assets of the profitable GE Capital unit.

The company will press ahead with its target of cutting overhead costs by US$2 billion by 2019 and boosting profits to US$2 a share next year.

Since joining GE Healthcare in 2014, Mr. Flannery has led the turnaround of the business, increasing organic revenue by five percent and margins by 100 bps in 2016.

With the company for 30 years, Flannery is now President and CEO of GE Healthcare.

Mr. Flannery commented, "Today's announcement is the greatest honor of my career".

On day one, Wall Street seemed happy with Flannery's selection.

"Immelt moved GE away from financial services and brought the company back to its bread-and-butter around heavy industrial services for manufacturing, oil, gas and energy", said Andy Sivaraman, senior vice president at Paramus, N.J. -based GE partner ITC Infotech.

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