Following a 16 year run as General Electric Company (NYSE:GEC) CEO, Jeffrey Immelt said he would retire at the end of this year. During his tenure, Immelt has overhauled the conglomerate’s portfolio considerably. He has also overseen GE’s reign as the Dow Industrial Average’s worst performing stock among companies that haven’t gone bankrupt or left the index.
In short, Immelt is stepping down because he couldn’t move the stock price. Ivan Feinseth, chief investment officer at Tigress Financial Partners told The Washington Post, "Why the change? Two words: stock price."
A New Beginning
The new CEO at GE will be John Flannery who joined GE Capital in 1987. Flannery, son of a bank executive, led the $17 billion acquisition of Alstom SA’s power business, the biggest industrial acquisition in the GE’s history.
As one of four internal contenders for the top job at GE, Flannery won the position based on his broad experience with the company and inclusive leadership style, according to a source who spoke with The Wall Street Journal.
According to Shelly Lazarus, a director at GE, Flannery is “willing to contemplate significant change. He is quite bold in his thinking.’’ Lazarus added, “He can cast a cold eye even though he is a very warm person.’’
Transition Paves The Way
It’s widely acknowledged that Jeffrey Immelt accomplished a major turnaround for GE during his tenure. He steered the company through the Sept. 11 attacks and the 2008 financial crisis. He managed an exit from banking and financial services as well as home appliances and positioned GE to become a leader in aviation engineering, power, health care and energy.
Immelt built a presence in shale oil and gas drilling and most recently merged oil and gas operations with Baker Hughes (NYSE:BHIA). Importantly, Immelt also invested heavily in digital services to make data and analytics an important part of the company’s entire product line. This includes everything from mammogram machines, airplane engines, locomotives and even wind turbines.
Related: GE MOVING TO INDUSTRIAL IOT
And Now, The Future
It’s up to Flannery to take reins and accomplish what Immelt did not – profitability for investors. He seems ready for the job. On a conference call with investors, Flannery said he would review GE's business and gauge overall performance "with a sense of urgency." Said Flannery, "Clearly there's areas we need to improve on. No one's happy with the stock price right now... We know we can do better."
Investors have reacted positively with GE stock rising Monday the most in months before closing at $28.94. CNN analyst consensus is buy, a rating that has held steady since the first of June.