Business and Leadership Shakeups Continue at GE
It's been a tumultuous couple of years for GE. The company's stock price has been decimated by the market, decreasing more than 75% from a high of nearly $32 a share as recently as December 2016. Dow Jones removed the company from its benchmark Industrial Average in June, and GE's Board of Directors sacked CEO John Flannery after little more than a year in the position, replacing him with H. Lawrence Culp Jr. on October 1. The stock ticked up following the change, but has continued to falter since, down from a high of $13.78 on October 9 to about $7.75 today.
GE's struggles arguably began after the company acquired Alstom's Power and Grid businesses for $10.6 billion in late 2015. Earnings were hampered by poor performance of the Power business and restructuring efforts ensued. The company subsequently sold off multiple assets and announced thousands of job cuts in 2017.
Earlier this month, Advent International completed the acquisition of GE's Distributed Power business, which included the Jenbacher and Waukesha product lines, the digital platform, and related services offerings. A new stand-alone energy company, called INNIO, was created by the carve-out from GE, with main operating sites in Austria, Canada, and the U.S. The following week, GE reached a deal to sell part of its stake in oil services company Baker Hughes, providing about $4 billion in cash to the company.
On November 19, GE announced its intention to reorganize GE Power into two businesses. The company said it will form GE Gas Power, comprised of Gas Power Systems and Power Services, and GE Power Portfolio, comprised of the Steam, Grid Solutions, Nuclear, and Power Conversion businesses. Furthermore, GE said it will consolidate Power's headquarters structure to create a more simplified business.
John Rice, who retired at the end of 2017 after 39 years with the company serving lastly as GE vice chairman, will return to the management fold to serve as the chairman of the GE Gas Power business. Scott Strazik, current president of Power Services, has been named CEO of GE Gas Power, while Russell Stokes, current CEO of GE Power, has been named CEO of GE Power Portfolio.
"One of my top priorities is positioning our businesses to win, starting with GE Power. The leaders we are announcing today are exceptionally well suited to lead our new Gas Power and Power Portfolio teams in their efforts to deliver better customer outcomes and improve their execution and cost structures," Culp said in a press release.
-Aaron Larson is POWER's executive editor (@AaronL_Power, @POWERmagazine).
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