General Electric Co. fired Chief Executive John Flannery after 14 months in the job as deeper problems in the conglomerate’s troubled power unit blindsided the board and caused GE to warn it would miss profit and cash targets.

The company named board member Larry Culp, who became a director in April, its new chairman and CEO, effective immediately. Mr. Culp, a former CEO of Danaher Corp. , had joined GE’s board as part of a broader shake-up of the struggling conglomerate.

Shares of GE, which have tumbled by half during the past year after the company slashed its dividend and missed financial targets, rallied on the news. On Monday, the stock rose 7.1% to $12.09.

GE warned it would miss its profit and cash-flow goals for 2018. GE also said it planned to take an accounting charge as large as $23 billion for its power business, which makes turbines for power plants and has been struggling with weak demand.

Much of the charge would be related to the 2015 acquisition of the power business of France’s Alstom SA, people familiar with the matter said. The deal, intended to bulk up GE’s market share, backfired as global demand for power generation sharply declined. That left GE with factories filled with extra inventory and little cash coming in from customers.