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GE names Immelt to succeed Jack Welch

General Electric Co on Monday named Jeffrey Immelt, the 44-year-old head of its high-flying Medical Systems division, to succeed John "Jack" Welch, the management legend who has run GE for two decades, when Welch steps down at the end of next year.

Immelt, long considered by Wall Street to be the front-runner to replace Welch, was named president and chairman-elect of the Fairfield, Connecticut-based industrial, financial services and broadcasting giant, effective immediately.

Immelt will become chairman and chief executive officer when Welch retires in late 2001, becoming only the ninth person to hold those titles in GE's 108-year history.

Immelt has been with GE for 18 years -- all his working life -- and most recently served as president and chief executive of GE Medical Systems, a $7 billion GE unit that develops medical diagnostic and information systems and is among the conglomerate's most profitable operations.

GE, the world's biggest company in terms of market capitalisation, is widely considered one of the world's best- run big companies.

Analysts say that is largely thanks to chairman and chief executive Welch, the feisty Massachusetts native who transformed GE from an old-style manufacturer with a valuation of $13 billion when he took the helm in 1981, to an Internet-savvy services giant valued at about $500 billion today.

The selection of Immelt ends months of speculation about who would succeed Welch, who was named "Manager of the Century" by Fortune magazine last year.

Although GE never disclosed the identities of the contenders to replace Welch, who turned 65 on Nov. 19, it was widely believed that the race had narrowed to three men: Immelt, W. James McNerney Jr., president and chief executive of GE Aircraft Engines, and Robert Nardelli, president and chief executive of GE Power Systems.

Last summer, GE named new No. 2's under all three executives, a move taken by Wall Street to mean the three were, indeed, the top contenders.

Welch said it was likely that the unsuccessful candidates would leave GE.

"We had three great CEO candidates, three sensational people," Welch said at a New York City news conference on Monday, with Immelt at his side.

"We think we picked the right one, yet today there are two great CEO candidates still in their jobs at GE, evaluating their options. They are being pursued aggressively outside and evaluating their options."

"They are going to be courted by every smart company in the world because they are as good as gold," Welch said.

Nardelli and McNerney could not immediately be reached for comment.

Welch and Immelt appeared at the news conference wearing identical navy blazers, light blue shirts with no tie and khaki pants.

They said Immelt was informed of his promotion at 5:30 last Friday afternoon in a telephone call from Welch. Immelt, along with his wife and daughter, immediately flew to Florida to join Welch for a mini-celebration over the weekend, they said.

GE shares on Monday dipped 1/8 to close at $49-1/8 in New York Stock Exchange trade. GE shares over the past five years have risen by 331.69 per cent, compared to a Dow Jones Industrial Average rise of 105.8 per cent, and an S&P 500 rise of 121.06 per cent over the same period.

"The easiest way to see (Welch's legacy) is that in the 20 years that he was the CEO, that stock has gone up an average of 25 per cent a year," said Larry Horan, analyst at Parker/Hunter Inc. "There aren't many 20-year track records like that, or even 10-year track records like that."

Immelt said at the news conference that GE has no plans to sell off its NBC broadcasting unit, and also said he expects GE to maintain its strong growth rate of recent years.

"I just don't see any limit to how we can grow or where we can do things," he said. "I don't think of GE as a big company. I see GE as a company that can make things happen."

GE had 1999 net earnings of $10.7 billion on revenues of $111.6 billion.

"I think Wall Street got who they anticipated," said Bill Fiala, analyst at Edward Jones. "All three candidates were clearly excellent executives, (but) Jeff seemed to have age on his side, which gives him a good 20 years at the helm, which is the consistency that GE likes," Fiala said. Nardelli is 52 and McNerney 51.

"I do think Jeff is the right man for the job," said Michael Regan, analyst at CS First Boston.

Asked if GE under Immelt can keep up the strong growth associated with the Welch era, Regan said in an interview on CNNfn TV: "Absolutely, because I believe that Jack Welch has worked over the last five years to position GE for sustainable earnings growth over the next five years, because he understands that his legacy at General Electric is tied more to how the company does five years after he retires than how it does in the last year he's there."

Immelt, a native of Cincinnati, Ohio, who has served as president and chief executive of GE Medical Systems since 1997, was also named to the GE board of directors. Along with Welch and GE Vice Chairmen Dennis Dammerman and Robert Wright, he will serve as a member of the corporate executive office.

Immelt began his career with GE in 1982 and has held a series of leadership roles with GE Plastics and GE Appliances.

Joseph Hogan, 43, was named to succeed Immelt as president and chief executive of Waukesha, Wis.-based GE Medical Systems, effective immediately.

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