GE Healthcare CEO John Flannery has taken over Immelt's role as CEO, and will assume the title of chairman from him at the end of the year.
The 30-year General Electric (GE) veteran poised to take over as the industrial conglomerate's chief executive promised Monday to review every part of a vastly simplified but sprawling portfolio - and the division he now heads could be next on the GE chopping block, in one analyst's view. He brings unique experience and a strong skill set to the job. According to his company bio, he also bolstered the unit's digital and technological capabilities, particularly through the launch of Sustainable Healthcare Solutions, to reinforce the company as a leader in industry technology.
Separately, GE announced the appointment of Kieran Murphy as president and CEO of GE Healthcare, effective immediately. John Flannery, CEO of GE Healthcare, will step up to the top spot at the company on August 1.
"In a conglomerate like GE, some parts of the portfolio will always be up for review, but I don't expect large-scale shedding (of business units), to be honest", said Morningstar equity analyst Barbara Noverini. One of the most lucrative measures was to operate leasing and lending business abroad with profits that face little to zero foreign taxes, and no American taxes as long as the business is kept overseas.
GE has struggled somewhat in the stock market in recent times, with its stock falling 8% year-to-date, although its share price was boosted nearly 4% in early trading on Wall Street on Monday following news of the change. In 2007, GE's finance arm accounted for about 55 percent of its profits, but its large exposure to commercial real estate left it vulnerable during the financial crisis.
Investors bid up GE stock 4% in premarket trading.
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Current CFO Jeff Bornstein has been promoted to Vice Chair of GE.
Mr. Flannery said, "Today's announcement is the greatest honor of my career". "He has transformed the GE portfolio, globalized the company and created a vision for the GE of the future by positioning the company to lead in digital and additive manufacturing". "He will be trusted by investors, our customers and the GE team", Immelt said in a statement.
GE is one of the biggest public companies in the USA with segments in industries including automation, energy, oil and gas, transportation and finance.
Since Immelt became CEO in 2001, GE's shares have declined 30 per cent, while the S&P 500 index more than doubled. Meanwhile, some of GE's most comparable peers such as United Technologies Corporation (NYSE: UTX) and Honeywell International Inc. On Mr. Flannery's watch, GE spun off its consumer credit business, Synchrony Financial, sold its appliance business, and purchased of the energy business of Alstom SA.
The activist and its co-founder and Chief Investment Officer Ed Garden had increased the pressure on Mr. Immelt this year.
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