Facebook's IPO Debacle, Day 3: Un-Friended and Dis-Liked on Wall…
Former Olympic Rower Turned to Minimalism to Pay Down $82,000 in DebtForbes reports that General Electric Company (NYSE: GE) ex-CEO Jack Welch is really angry with his successor Jeff Immelt. I don't know whether Welch still holds shares in GE but if he does, he can't be happy that they've fallen 20% since his hand-picked successor took over. But beyond the financial pain, Welch is suffering from a badly bruised ego -- that's because he prides himself on picking people. And he clearly blew it when he selected Immelt.
I saw Welch this morning sitting in the same spot I was in on GE's CNBC set last February during a stint on Squawk Box. And Welch had some choice words for Immelt. Forbes reports that Welch said "I'd be shocked beyond belief and I'd get a gun out and shoot him if he doesn't make what he promised now. Just deliver the earnings. Tell them you're going to grow 12 percent and deliver 12 percent."
I think the biggest problem for Welch is that it's become so obvious what a huge mistake he made in picking Immelt. As Welch said: "Here's the screw up: You made a promise that you'd deliver this and you missed three weeks later. Jeff has a credibility issue. He's getting his ass kicked. He apologized."
I've written about Immelt's mediocre performance since 2006. Maybe now that Jack Welch is chiming in, things will start to happen to boost GE's share price.
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter
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Reader Comments (Page 2 of 2)
4-19-2008 @ 7:48PM
Jerry Lisman said...
I'm amazed at the venom in these blogs. GE and Jeff miss the target once and you make it sound like this has been a "regular" thing.
Regarding the pension obligations, I believe the GE pension funds are either fully funded or overfunded.
GE and the management team has delivered reliable earnings growth year in and year out. In our business, earnings growth is our #1 priority, even ahead of top line growth. In our world, we pay bills with bottom line profits. Just because the "Wall Street" crowd "thinks" that GE is more valuable if they break it up doesn't make it right. All the "crowd" cares about is themselves and their greed, just look at the sub-prime debacle!! In my book, people who can do.....people who can't teach or go to Wall Street. Let's sell short, predict doom and gloom and then cash out. Talk about thieves!!
People, if you can do better, go run a company, if not, sell your stock and put it in a bank and let the running of companies to people who know what they are doing, not back seat drivers.
4-24-2008 @ 11:28PM
X said...
Jack's comments were dumb.
He was not talking about the overall economics of the business, he was talking about essentially management of earnings to please Wall Street. His major beef is that Jeff said he would hit estimates 2 weeks ago and then missed.
Jack was a master of offsetting losses with capital gains to hit earnings. Pre Sarbox, this was a common practice.
According to Jeff, after he affirmed the estimates, he had to book some fallout from the credit mess.
Any normal company with rigorous accounting will have noise in their earnings. Who knows everything that went on, but the external auditors don't cave in like they used to, there may have not been any deals that could be closed in a week or whatever.
The point being what people should care about is the economics of the business, not earnings management. They should stop with the idiocy of announcing estimates of future earnings and let the analysts earn their checks. Pay attention to the business, not the timing of accruals.