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General Electric abruptly deposed John Flannery as president and chief executive on Monday and installed Lawrence Culp as his successor.
Last week, the stock posted one of its worst weeks of the year, down 7% to a nine-year low of $ 11.21.
Concern over a recent gas turbine failure in Texas weighed on GE. Its board of directors will meet Wednesday to discuss the extent of the problem, according to the Wall Street Journal. Flannery would have reassured the employees that the company's engineers had found a solution to the flaw and asked employees to "fight for the company," explaining that the media had played down the failure of the company. A wind turbine blade from the Colorado Bend Generating Station in Wharton County, Texas.
But the board was frustrated by the slow pace of change under Flannery, sources close to CNBC told CNBC. This was not due to the turbines issue, but to a performance problem, according to sources.
Flannery was appointed in August 2017, taking the helm of Jeff Immelt as the conglomerate's stock declined steadily. However, the value of GE has continued to deteriorate, setting new lows, investors are still not convinced by Flannery's turnaround plan and its stagnant power activity has hit new hurdles, like the turbine failure in Texas .
GE was worth nearly $ 600 billion in August 2000, a time when it was one of the most valuable companies in history. Its valuation slid during the first decade of Jeff Immelt's term as CEO before suffering a hard blow during the 2009 financial crisis. But GE's value has returned to its pre-crisis levels almost as much quickly, reaching up to $ 300 billion in December 2015. Yet shareholder confidence fell sharply in January 2017, to about $ 31 per share.
In June, GE was excluded from the Dow Jones Industrial Average. It was the oldest component of the "blue chip" index – 111 years old.
-CNBC & # 39; s
David Faber
and
Andrew Ross Sorkin
contributed to this report.
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