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THE HEADLINES

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PRE-EXISTING CONDITIONS

John Flannery inherited a GE that even Thomas Edison couldn’t love. And now it appears that he is taking the fall for his predecessor’s mismanagement.

The GE CEO was abruptly removed from his position on Monday after the conglomerate announced it would miss Wall Street expectations. General Electric’s board was growing increasingly frustrated with the slow pace of Flannery’s turnaround plan.

Flannery, who held the position for just over a year, will be replaced by H. Lawrence Culp, the former CEO of Danaher. Culp will be the first outsider named CEO.

But Flannery shouldn’t worry about his job prospects. He’ll be able to pad his resume with a laundry list of accomplishments: overseeing GE’s removal from the Dow Jone Industrial Average, cutting the company’s dividend in half, and allowing GE shares to tumble to 9-year-lows.

But that’s not all. In addition to the C-suite shakeup, GE also announced a $23B non-cash charge to abandon its fledgling power business.

Since Jack Welch retired in 2001, GE has been in a tailspin, losing almost half a trillion dollars in value over the same period of time. While things haven’t looked great for the bluechip, GE shares closed up 7.1% premium on news of the leadership change.

Water Cooler Talking Point: “Wait, so why do so many b-school classes teach students about GE and their CEOs? I could lose a company half a trillion dollars at least twice as fast. Trust me.”

 

SHADOW MANAGEMENT

Just a week after the resignation of its visionary founders, Zuck has promoted a (presumably spineless) vassal to act as a figurehead at Instagram. Adam Mosseri a 10-year veteran of Facebook (and later, Instagram) will “be in charge” (read: will parrot Zuckerbot’s every wish) at the semi-autonomous app purchased by Big Blue for $1B in 2012.

The news comes just a week after Instagram founders Kevin Systrom and Mike Krieger left the company over philosophical differences with Facebook management. The ‘book’s C-suite, increasingly dependent on the ‘gram as a driver of revenue took a rapidly expanding role in the day-to-day activities of the largely autonomous photo and DM sliding app.

With the end of the Systrom and Krieger era, the social network can put hamburger-menu-gate behind it and continue doing what it does best: leaking user data and causing civil unrest. And have no fear, Facebook management totally promises it definitely doesn’t plan to suck every last drop of profit out of IG like some sort of mutant capitalist vampire.

Water Cooler Talking Point: “I can’t wait until I get Facebook Marketplace ads in Instagram Stories so I can more easily buy a ‘Mint condition rim set for a ’93 IROC’ from a guy with face tattoos who only accepts cashier checks.”

 

NAFTA IS DEAD, LONG LIVE NAFTA

Free trade in North America is alive and, well, shifting. Canada signed on to the previously agreed upon deal between the US and Mexico to allow all goods to flow as freely as narcotics do from Mexico to the States.

Patriotically dubbed the “United States-Mexico-Canada Agreement,” the 3 countries have come to terms to replace NAFTA, which has been in place since 1994. Key differences from the OG trade agreement include treatment of the farming and auto manufacturing industries.

As part of the deal, U.S farmers will have fewer barriers for exporting dairy products into Canada. Currently, there is a limit on how much milk and cheese the US can export to Canada. In their defense, they’ve heard about West Virginia. With the new deal, those limits will be revised upward and more farmers can send their dairy north of the border.

Another hotly debated clause will require 75% of an automobile’s parts to be made in North America if it is to forego tariffs (currently that number is 62.5%). In addition, 40% to 45% of the cars must be made in a factory where the average minimum wage is $16.

Water Cooler Talking Point: “I guess naming Nafta 2.0 the Lady Liberty United Trade Agreement brought to you by the US Marine Corp. wasn’t well-received by Mexico and Canada?”

 

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IN OTHER NEWS

• Mind the gap. California has become the first state to require women to be on the board of corporations headquartered in the land of avocado and guys named Blake. Today women only hold 18% of board seats at the 3k largest companies in the US.

 

• Groupon is going to have to sell a hell of a lot of half-priced, limited-time-only Benihana gift cards to dig themselves out of this hole. The online discount experience and goods hawker will pay $57M to IBM for using patented e-commerce technology without its authorization. This isn’t the first time that IBM has played this card, having netted $1.2B from licensing activities in 2017 alone.

 

• Welp, see ya later. Google’s head of commerce, Sridhar Ramaswamy, will leave the search engine and head to Greylock Partners. The former head of the $110B ads and commerce business will become a venture partner and focus on early-stage entrepreneurial projects.

 

• United Airlines just ordered nine Boeing 787-9 Dreamliners with a price tag of $2.5B. UA plans to have forty Dreamliners in its fleet by year’s end and will have another two dozen on order, making a big bet on long distance nonstop trips. Speaking of Dreamliners, was there anything more 2000’s than Hooter’s Air?

 

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