F A I R F I E L D, Conn., Nov. 27, 2000 -- The closely-watched search for a successor to General Electric’s renowned chief executive is over.
GE named medical systems division boss Jeffrey R. Immelt to replace the retiring John F. Welch Jr. when he steps down at the end of next year.
Immelt, 44, was one of three top GE executives who were believed to be in line to succeed Welch, a business legend who turns 65 next month and has been at the helm of the industrial and broadcasting powerhouse for about 20 years.
Company spokesman Gary Sheffer said today that Immelt, who has been with GE for 18 years, will immediately become president- and chairman-elect, working closely with Welch until the transition is complete next year.
Welch had previously announced his plans to retire.
A Three-Man Horserace Immelt, a 6-foot-4-inch, Harvard MBA and former college football player, was the frontrunner to replace Welch, though two other GE executives were candidates: Robert Nardelli, 52, head of GE Power Systems and nicknamed “Little Jack” for his similarities to Welch, and James McNerny, 51, who was praised for turning big profits at GE Aircraft Engines. Both Nardelli and McNerny are expected to leave the company.
“Clearly the headhunters are lined up and down the street to get those two candidates and I think come this time next year, they will be running a Fortune 500 company,” says GE analyst Bill Fiala.
‘A Natural Leader’ Immelt has been president and chief executive of GE Medical Systems, a $7 billion segment of the General Electric. The division, based in Waukesha, Wis., is a world leader in medical diagnostic technology and information systems.
In announcing the GE board’s decision, Welch described Immelt as “ a natural leader, and ideally suited to lead GE for many years.”
“He brings a keen strategic intellect, a cutting-edge technological background, strong leadership skills and a unique set of team-building skills,” Welch said.
The other two executives widely believed to be under consideration for the top job at GE were Robert L. Nardelli, president and CEO of GE Power Systems and W. James McNerney, head of GE Aircraft Engines.
Making of the President-Elect Immelt joined GE in 1982. After a brief stint in corporate marketing, he held a series of jobs in the company’s plastics division. He moved to appliances in 1989 as vice president of consumer service and in 1991 was made vice president for marketing and product management.
In 1992 he returned to the plastics division, rising to vice president and general manager. He was made president of GE Medical Systems in 1997.
“He is an extremely capable executive leader, as evidence by his record as CEO of GE Medical Systems,” said analyst Martin Sankey, vice president of Goldman, Sachs in New York. “He compiled a strong record of generating growth and moving into new markets.”
“He was the successor I expected; he was the successor I wanted,” said Michael Linsky of McDonald Investments. “I think he will do a superb job.”
Welch’s Legacy Welch is widely credited with transforming a company best known for light bulbs and appliances into an empire that includes the television network NBC. He shook up GE’s management structure and sold major divisions including the housewares, air conditioning and semiconductor businesses.
In his 20 years as chairman, profits have risen from $1.6 billion to $10.7 billion in 1999, when GE had revenue of $110.8 billion.
The Fairfield-based GE is also the world’s largest company in terms of market capitalization, worth about $490 billion at the close of trading Friday.
However, analysts say the complex industrial conglomerate Immelt inherits from Welch is about to get more complicated.
Immelt’s first order of business is absorbing GE’s latest acquisition, Honeywell International, which was purchased in October for $45 billion in stock.
Among the reservations Honeywell executives had about the merger was the issue of Welch’s departure; Welch had initially planned to leave this year after turning 65, but put that off until the end of 2001. His announcement that he would stay an extra year eased the reservations of Honeywell executives and helped to seal the deal.
ABCNEWS’ Betsy Stark contributed to this report.