Inside Financial Services

LAY OFF JEFF IMMELT. GE’S LOUSY STOCK PERFORMANCE OVER THE PAST DECADE ISN’T HIS FAULT.

There are many reasonable objections to President Obama's choice of Jeff Immelt as a high level economic advisor. I have a few myself. But this notion that Immelt is unqualified simply because GE's stock has lagged badly since he's CEO is nuts. CEOs might be able to affect the returns their companies generate, but they have no say in how investors

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There are many reasonable objections to President Obama’s choice of Jeff Immelt as a high level economic advisor. I have a few myself. But this notion that Immelt is unqualified simply because GE’s stock has lagged badly since he’s CEO is nuts. CEOs might be able to affect the returns their companies generate, but they have no say in how investors will view those returns, so let’s don’t go blaming Immelt for something beyond his control. But more to the point, Immelt was at a huge disadvantage the day he became CEO: his predecessor, management genius Jack Welch, had spent years concocting bogus earnings growth at GE by systematically under-reserving at the company’s reinsurance unit. Prior to the unit’s sale (to Swiss Re, in 2006) Immelt had to make up for those years of deficiencies by larding in extra reserves, to the tune of nearly $10 billion. Even for GE, that’s a lot of money. To put it in perspective, the company generated $13 billion in net income the year Immelt took over. No wonder the stock has lagged. . . .

3 Responses to “LAY OFF JEFF IMMELT. GE’S LOUSY STOCK PERFORMANCE OVER THE PAST DECADE ISN’T HIS FAULT.”

  1. Richie Rich

    OK, but how about the dismal performance at NBC? Are they making money on their bio-energy investments? It has been 10 years and all he has to show for it is that he’s buddy buddy with a Far Left president.

  2. Reginald Jones

    Excellent comment, Matt !!! You are absolutely right. Welch’s blatant manipulation of earnings was enabled by complacent analysts and their unwillingness/failure to read the accounting “fine print.”

    The elevation of Jack Welch to sainthood by the media and the sycophants of Wall Street was disgustingly similar to the beatification of Alan Greenspan. As always– the truth eventually emerges and “value will out.”

    “In the short run, the stock market is a voting machine. In the long run, it’s a weighing machine.”
    -Ben Graham

  3. Mike

    I was falling out of my seat laughing at this ridiculous defense of Immelt. After nearly 10 years, you have to look at the bottom line. That’s what any halfway decent CEO would do. Accounting for splits and dividends, the adjusted stock change for GE stock: down ~33% in the nearly 10 years since Immelt became CEO. Over the same time (adjusting for dividends and splits): HON stock: up to ~111%; 3M stock: up ~136%. SI stock up ~259%; UTX stock: up ~216%. Ten years of excuses. The guy should have been canned long ago. Actually, they should have hired McNerney who was passed over at GE in 2001 for Immelt, but then left to became CEO of MMM first and then BA later. BA: up ~109%

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