General Electric on Monday announced the departure of longtime chief executive Jeff Immelt, whose moves to refocus the American conglomerate on its industrial roots had drawn mixed reviews on Wall Street.
General Electric CEO Jeffrey Immelt (centre), senior vice president John Flannery and Clara Gaymard (left), head of GE France, leave after a meeting at the Elysee Palace in Paris May 28, 2014. The board selected them as finalists after lengthy interviews last month at an offsite location in NY. Its biggest divestiture was GE Capital, which at one point generated the majority of the company's earnings. Mr Bornstein was promoted to vice chair of the company. Among other moves, Immelt got out of plastics, appliances, insurance, network TV, and almost all of GE Capital; he got into oilfield services, software, 3D printing, and more non-U.S. operations.
Even if it didn't force the CEO change, Trian will likely continue to wield influence. GE shares have fallen about 30% since he took over in 2001. "It's been ongoing for four years". "I spent a lot of time making investments and assessing investments".
The systemically important designation was removed from GE Capital a year ago. GE says that Immelt will stay on as Chairman through the end of of the year. "There's nobody more open to him driving change than me". GE named John Flannery as its new CEO. At an April activist conference in New York, Trian co-founder Ed Garden upped the ante.
In fact, he has nursed it back to improving sales and profits by focusing primarily on organic growth opportunities, and the business remains core to GE.
It was at the Electrical Products Group Conference in May that Immelt's differences with Trian became obvious.
Among other industrial conglomerates, United Technologies (UTX) dipped 0.6% to 119.88 to re-enter buy range, Honeywell (HON) eased 0.4% to 133.26 but remains near a 135.20 buy point, while US -listed shares of German rival Siemens (SIEGY) dropped 2%.
"Although the succession topic has been swirling for much of the past year, today's announcement comes as a surprise, especially regarding the short timeframe for the hand-off", Deane Dray, an analyst at RBC Capital Markets, said in a note. The fund is already up by at least $250 million since it disclosed the $2.5 billion bet in 2015, though the shares are still far below the $45 share price it targeted.
The CEO shakeup is not a surprise, according to Lauren Thomas at CNBC. It would take several years to determine the pay-off of some of Mr Immelt's initiatives, including a digital division, he said. "We ended up in exactly the right place", the outgoing CEO said in an interview.
Here are the five biggest challenges Immelt faced during his time as CEO of GE.
Partners Healthcare recently formed a partnership with GE to use artificial intelligence to manage medical data, and Partners Chief Innovation Officer Christopher Coburn said he doubted the company would move away from that direction, or from Boston itself.