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Changes ahead for GE as long-standing CEO Immelt to step down

General Electric on Monday announced that Jeff Immelt, its chief executive for 16 years, will be replaced later this summer by GE veteran John Flannery, signaling potentially big changes ahead at one of the world’s most important renewables companies.

During Immelt’s tenure, which began just days before the 9/11 terrorist attack in New York City, he transformed GE into a renewables powerhouse as part of a broader return to the company’s industrial roots, pivoting away from the financial services businesses that had become central under prior CEO Jack Welch.

Yet close observers of the company will not be surprised by Immelt’s planned departure. Flannery, 55, is set to take over as CEO on 1 August, and as chairman of the board at the beginning of 2018, when Immelt will leave the company.

The change at the top comes amid persistent dissatisfaction with GE’s top management among some investors. Some analysts believe GE’s sprawling business empire could be broken up into smaller, more focused companies under Flannery, who is currently chief executive of GE Healthcare. 

GE’s share price still has not recovered the ground it lost during the financial crisis late last decade, and it remains well below its $40 level when Immelt took command. On the news of Immelt’s departure on Monday, GE shares surged more than 4% in early trading, to around $29, their biggest intraday gain since 2015.

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Less than six months after taking the helm at GE, Immelt, 61, had the foresight to pull the trigger on an acquisition of bankrupt Enron Corp.’s wind-turbine business. Today GE stands as the world’s second largest turbine supplier, with deep strength in the US market and a growing presence in a number of important markets around the world.

Following GE’s 2015 acquisition of Alstom’s power and grids business – the largest industrial acquisition in GE’s 125-year history – the company created a separate renewables unit that now stands as a “tier-one” equal alongside divisions like Oil & Gas, Healthcare, and Aviation.

As head of GE's business development activities at the time, Flannery led the complex Alstom acquisition, which involved delicate negotiations with the French government.

In buying Alstom, GE re-entered the rapidly growing offshore wind market and gained a leadership role in the world’s vast – albeit mature – hydroelectric industry. 

Paris-based GE Renewable Energy is led by Alstom veteran Jerome Pecresse.

Under Immelt, GE also entered and then left the solar module manufacturing business, although the company still makes PV inverters, invests in utility-scale solar projects through its Energy Financial Services unit, and has said it is constantly reevaluating the role it plays in solar – now the world’s largest and fastest growing source of new renewables capacity.

GE’s ongoing push into renewables has overlapped with its investments to become a “digital industrial” company, as it looks to leverage its Predix operating system for the internet of things to develop lucrative revenue streams in a number of industries.

Yet while many investors have supported GE’s general direction of travel under Immelt, his execution of the industrial and digital pivot has increasingly come into question. Immelt's reputation took a hit among investors in 2009 when the company cut its quarterly dividend for the first time since the 1930s.

Some have questioned the wisdom of GE’s decision last year to merge its oil and gas business with Baker Hughes, creating an oilfield services goliath at a time when the oil market continues struggling to mount a sustained comeback. That deal is expected to close soon.

Flannery has deep experience in finance and has spent half his career outside the US, including roles in Latin America, India, and Asia-Pacific – all critical markets for GE Renewable Energy. His appointment is part of a succession plan that's been underway since 2011, GE says.

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