NOGUCHI: Replacing him is John Flannery, himself a 30-year GE veteran and current head of its health care division. Immelt, 61, will remain chairman through his retirement on December 31, following which Flannery will take over as chairman.
Flannery told Reuters previous year he aimed to "double down on life sciences", given this business's large and high-margin opportunities. "The board has encouraged me to come in and look at it afresh".
On a separate call with investors earlier, Flannery said "we'll review each of those businesses in the portfolio, how it benefits and contributes to the broader company". "We expect Mr. Flannery to be more aggressive in this regard and we would not expect any sacred cow".
"GE may not necessarily need a drastically new message, but it needs a new messenger", said Barclays analyst Scott Davis. "We're not starting from a weak position at all". The shares have fallen 12 percent this year, compared with an 8.6 percent gain for the Standard & Poor's 500 Index.
Immelt's run as CEO followed the legendary Jack Welch's tenure, and was marred by the financial crisis along with subsequent stock underperformance in the following years.
GE has spent billions of dollars developing digital products, from sensors in jet engines to augmented reality software, but shareholders have been wary of the company's new direction. Mr. Immelt and the board would have rather had a share price in the $30 or higher range for the change, but the timing wasn't influenced by investor pressure, according to this person. Peltz has pushed GE to deepen cost cuts to boost profits.
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"His background in the Capital side may mean that he bring some financial discipline to the CEO role", Julian Mitchell, an analyst with Credit Suisse, said Monday in a note.
Flannery did not mention any specific plans for GE, but said digital efforts will be at the heart of its strategy. Immelt, however, did refocus the conglomerate on its core manufacturing businesses, selling television broadcaster NBC, the home appliances division and most of its lending operation. General electric is 125-years-old and is the oldest member of the Dow Jones Industrial Average.
For instance, GE's cash flow in the first quarter was "abysmal", Cramer continued.
John Flannery started his career at GE back in 1987, where he focused on the risk of leveraged buy-outs.
Immelt, 61, guided GE through the sale of its finance business, GE Capital, and the acquisition of French power business Alstom, three years ago in a $13.5 billion deal.
In a press release, Immelt has said, "John is the right person to lead GE today".
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