... he assured investors the company was on track to meet its profit targets. And in December, he told analysts that G.E.’s goal of earnings growth of at least 10 percent in 2008 was “in the bag.”For a company GE's size and importance this was a dramatic slip up and raised a real credibility issue for Immelt to contend with. The analyst community used the earnings shortfall as an opportunity to turn on Immelt and GE. The New York Timers also reported in the same piece,
“There is no doubt that this is a historic event,” said Steve Tusa, an analyst with JPMorgan Chase. “The company has to convince investors that something is going to change.”
The negative news on GE has forced me to include Immelt on my CEO Watch list but I remain very skeptical that his status as CEO is currently in serious trouble. I did, however, feel there was far too much negative news on GE's and Immelt's overall performance to ignore what has been going on.
As the news filtered out on the earnings shortfall there were numerous other negative assessments put out and covered in the financial press. Calls were again made for GE to begin seriously considering the sale of certain assets to help the company and make it more efficient and amenable to investors growing concerns. At first, piling on the negative circumstances continued when well known former GE CEO, Jack Welch, was initially quoted in a USA Today story as well as others in which he said in an interview,
...he would "get a gun out and shoot" his successor, Jeff Immelt, if he allowed GE to miss earnings targets again. "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," Welch said on CNBC, a cable station owned by GE. "Just deliver the earnings. Tell them you're going to grow 12% and deliver 12%."
Welch then went on to say,
"Here's the screw up: You made a promise that you'd deliver this and you missed three weeks later," Welch also said. "Jeff has a credibility issue. He's getting his a— kicked. He apologized."Welch after sleeping on his comments found a way to retract much of what he said. According to a story earlier today by Nancy Moran and Rachel Layne for Bloomberg,
"In an effort to put GE's first-quarter earnings in context, I really stepped in it,'' Welch told CNBC. "Much to my shock and horror'' the comments "about the performance of GE and CEO Jeff Immelt were interpreted to mean the exact opposite than what I intended. Nothing is worse than having a predecessor perceived as commenting negatively on a successor."I could go on and on about what analysts and shareholders are thinking and making known but for now, keep a close eye on GE and its numerous operations. Something is bound to happen.
For more:
MSNBC (video)
No comments:
Post a Comment