Artifact

Jeff Immelt Reshaped GE, but Couldn’t Win Over Wall Street

John Flannery needs to bolster profits and recharge the company’s stock price.

After Thomas Edison, inventor of the incandescent lamp, started Edison General Electric Co. in 1890, the company quickly rolled out a slew of other products based on the same novel technology—electrification—that would reshape American life for the next century. They would also make investors in the succeeding company, named simply General Electric Co., rich along the way.

This 60-watt GE Edison Mazda Type B lamp from the 1910s was an early hit for the company, which put its bulb business on the block in June.
Photographer: Juan Madrid for Bloomberg Businessweek

If only Jeffrey Immelt, who announced on June 12 that he’s stepping down after 16 years as chief executive officer, could have said the same. He dramatically reshaped the company away from its huge—and volatile—GE Capital financial unit, and on June 8 even put the venerable lightbulb business up for sale. But Immelt failed to win over Wall Street, which sank GE shares about 30 percent during his tenure.

Incoming CEO John Flannery, a 30-year veteran who’s been a Mr. Fix-It for GE units around the world, must bolster GE’s profits and recharge its stock price—with activist investor Trian Fund Management LP looking over his shoulder.

Flannery most recently showed off his turnaround abilities as head of GE’s health unit, which makes diagnostic imaging machines. Taking over in 2014, he boosted sales and profits, and last year achieved double the margin gains he’d promised. At the parent, he says, “Our focus is running the company for cash and growth.”

Still, Flannery is expected to continue GE’s expensive strategy of adding high-tech features and software to its traditional products. The company last year spent $4 billion to develop analytical software and an additional $2 billion on industrial 3D printing. And it has about 26,000 software developers writing code to enhance its traditional products. Says GE Vice Chair Beth Comstock: “I don’t know how you don’t go digital as an industrial company.”

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