General Electric (GE) dominated the financial news cycle over the past week after the company divulged four of its gas turbines had to be shut down due to a problem with turbine blades. It made headlines again Monday after announcing H. Lawrence Culp Jr. would replace John Flannery as CEO:

GE (NYSE: GE) announced today that H. Lawrence Culp, Jr. has been named Chairman and Chief Executive Officer of the Company by a unanimous vote of the GE Board of Directors, effective immediately. Additionally, the GE Board has appointed Thomas W. Horton as Lead Director. Mr. Culp and Mr. Horton have been members of the Board since April 2018. Mr. Culp will succeed John Flannery as Chairman and CEO.

While GE’s businesses other than Power are generally performing consistently with previous guidance, due to weaker performance in the GE Power business, the Company will fall short of previously indicated guidance for free cash flow and EPS for 2018. In addition, GE expects to take a non-cash goodwill impairment charge related to the GE Power business. GE Power’s current goodwill balance is approximately $23 billion and the goodwill impairment charge is likely to constitute substantially all of this balance.

I do not think there will be any fundamental change in GE’s underlying operations under Culp. The stock is still off about 50% Y/Y. Once the news settles and investors focus on the company’s dismal business prospects, I expect the stock to drift lower. Read more:

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