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Cramer: GE's CEO change could mean the company is doing worse than expected

CNBC logo CNBC 10/2/2018 Elizabeth Gurdus
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General Electric's sudden CEO change may have gained the market's vote of confidence, but to CNBC's Jim Cramer, it suggested something more dire.

On Monday, the struggling industrial giant announced that it would replace CEO John Flannery with former Danaher chief Lawrence Culp, a move related to Flannery's slower-than-anticipated turnaround plans, sources told CNBC.

"When you boot a CEO after just 13 months, the presumption is that the company's doing far worse than you think," Cramer, host of "Mad Money," told viewers. "Otherwise, why not let Flannery muddle through, right?"

"We learned, once again, that GE is doing far worse than we thought, that the power division is even more of a disaster, and there's no easy fix whatsoever," Cramer continued.

But with a "brilliant manager" like Culp, a GE board member who was CEO of science-and-tech colossus Danaher, GE can at least "put an end to the negative surprise chatter" associated with the company's overhaul efforts, the "Mad Money" host said.

"The response? The stock surged more than 7 percent today," he said. "It's a brutal move, but Wall Street loved it, even if it didn't make any of the bearish analysts change their minds. Maybe they'll become more positive once the full story is known."

GE's stock ended the day up 7.09 percent, at $12.09 a share. Earlier on Monday, Cramer admitted he felt for Flannery, who was abruptly removed from his post by GE's board of directors.

"I do feel bad for John. He was trying to deal with the hand that Jeffrey Immelt left him. The hand was too hard," Cramer said on "Squawk on the Street."

Even so, Culp "was fantastic at Danaher," Cramer said. "So I think the company is in better hands.

Read more from Jim Cramer and other top money experts

Disclosure: Cramer's charitable trust owns shares of Danaher.

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