General Electric has just named veteran insider John Flannery to head the company after its longtime leader Jeff Immelt stepped down. Flannery has been with GE for 30 years and has been the head of the healthcare unit.
The company had long faced scrutiny over Immelt’s position as the company is now worth a third less than when he started as CEO 16 years go. Shares have sunk 30% since he has led the company. His under-performance was a key concern for many investors. He will be stepping down on August 1st but will remain as chairman, and when he retires on December 31st, Flannery will take over that position as well.
“No one’s happy with the stock price now,” Mr. Flannery remarked. Flannery was responsible for helping the health care unit see success and has even said that the sector in particular offered “so much long-term growth.” According to Flannery, G.E. was “just scratching the surface of what we can do in that business.”
Not everyone has been against Immelt however. “Jeff has positioned the company incredibly well for the future,” said Jack Brennan, lead independent director for GE’s board. “He executed a massive portfolio transformation and navigated the company through economic cycles and business disruptions. Today, GE is a high-tech industrial company with a bright future.”
Flannery has said in an interview with Reuters, “I’m going to do a fast but deliberate, methodical review of the whole company. The board has encouraged me to come in and look at it afresh.”
He had also said, “We’re not starting from a weak position at all.”
General Electric has a goal of cutting overhead costs by $2 billion in the next couple of years by 2019 and also wants to see profits of $2 a share in 2018.
Disclaimer: We have no position in General Electric Company (NYSE: GE) and have not been compensated for this article.