GE's new CEO Flannery to review portfolio with 'no constraint'

* Flannery to take over as CEO on Aug. 1, chairman on Dec. 31

* Says he will review portfolio without constraint

* Shares have fallen 30 pct during Immelt's tenure

* Stock ends up 3.6 percent on Monday (Rewrites, adds background on GE, Flannery)

By Alwyn Scott and Arunima Banerjee

June 12 (Reuters) - General Electric Co's incoming chief executive said he will conduct a swift review of the conglomerate's business portfolio with "no constraint," but signaled no major changes as the company sticks with its strategy of selling software-related services across its many divisions.

The maker of jet engines, power plants, medical scanners and railroad locomotives on Monday named veteran insider John Flannery as its next CEO, taking over from longtime leader Jeff Immelt, who reshaped one of corporate America's icons to focus more on technology but failed to deliver profit growth fast enough for some investors.

"I'm going to do a fast but deliberate, methodical review of the whole company," Flannery told Reuters in an interview. "The board has encouraged me to come in and look at it afresh."

In an earlier call with investors, he said the review would have "no constraint."

Immelt, who will step aside Aug. 1, led GE for 16 years, steering it through the financial crisis but leaving it worth a third less than when he took over.

GE's shares closed up 3.6 percent at $28.94 on the New York Stock Exchange on Monday.

Flannery did not mention any specific plans for GE, but said digital efforts will be at the heart of its strategy.

The company has spent billions of dollars building a digital business that marries electronic sensors and analytic computing to industrial equipment, even though those efforts have not yet boosted GE's bottom line as much investors hoped.

GE will make the results of the review public in the fall, but major changes are not needed, Flannery said. "We're not starting from a weak position at all."

The company will press ahead with its target of cutting overhead costs by $2 billion by 2019 and boosting profits to $2 a share next year.

PRESSURE FOR URGENCY

Flannery, a 55-year-old who joined the company 30 years ago and is now the head of its healthcare unit, will also become chairman after Immelt retires on Dec. 31.

Known previously as a dealmaker at GE, Flannery has been credited with nursing that unit back to improving sales and profits by focusing on organic growth.

He takes over from 61-year-old Immelt, who succeeded Jack Welch in 2001 and oversaw the divestment of its massive lending unit GE Capital, TV network NBCUniversal, and famed appliances business, shifting the conglomerate's focus toward technology, healthcare and manufacturing.

Despite investing heavily on developing digital products, from sensors in jet engines to augmented reality software, shareholders have been wary of the company's new direction.

Since Immelt became CEO, GE's shares have declined 30 percent, while the S&P 500 index more than doubled. That underperformance had some pressing for more urgency.

For a graphic on GE's share price, click on http://tmsnrt.rs/2rTtyop

Activist investor Nelson Peltz's Trian Fund Management bought a stake in GE in October 2015, the largest single investment the firm had ever made, and now worth about $2 billion. Trian immediately pushed for asset sales and cost cuts. Trian declined comment on the CEO change on Monday.

GE said Immelt's departure was not triggered by outside influences and was the culmination of six years of succession planning. It said its board set the summer of 2017 for Immelt's departure as far back as 2013.

The timing was not surprising given the serial underperformance of the stock and "investor fatigue with management's continued perceived ungainly portfolio actions," said Stifel analyst Robert McCarthy.

During Immelt's tenure, GE bought French peer Alstom's power business. On Monday it got U.S. antitrust approval to merge its oil and gas business with Baker Hughes Inc .

Despite Immelt's efforts to kick-start growth, the oldest surviving member of the Dow Jones Industrial Average has struggled to boost sales significantly in the past few quarters. In particular, the company's cash flow has been a cause for concern.

Flannery, who joined GE Capital in 1987, focused on leveraged buyouts and later led the corporate restructuring group. He has also ran GE's India business, its equity business in Latin America and the GE Capital business for Argentina and Chile. His new salary will be $2 million a year, GE said.

(Reporting by Arunima Banerjee in Bengaluru, Alwyn Scott in Seattle and Michael Flaherty in New York; Writing by Bill Rigby; Editing by Saumyadeb Chakrabarty and Bernard Orr)