GE's Immelt: Still Underperforming and Still Making Excuses

The video of this morning's appearance by GE Chairman and CEO Jeff Immelt on CNBC can be viewed here .

It runs about 8+ minutes. However, of particular interest to me was the segment at roughly minute 4:30 into the interview. This is where Joe Kernen of CNBC's Squawk Box program, asks Immelt, his ultimate boss, about why GE, as a conglomerate, is valuable.

Immelt rather brazenly says that GE exists 'because the market lets it exist,' or something like that. You can hear the exact quote for yourself at the video link. In defending the conglomeration, Immelt mentions, "performance" and 'common culture, goals....'

Then, to deflect attention from his own failure as CEO to beat the S&P, he now espouses '10-15-20 year' timeframes for the company, insisting that this is how "we view the company."

In other words, Immelt in effect pleads,

'let's all hail the golden past era of Jack Welch, and please overlook the sub-S&P500 performance over the entire tenure of my CEO- and Chairmanship of GE.'

To see what GE's total return performance has been under Immelt, take a look at the table in this blog post which I wrote earlier today.

Then Immelt plays the 'oughta, shoulda' game. He says that GE stock "should" go up with oil. Darn those stupid investors, eh? Why can't they price his stock right. It's soooo embarrassing!

As if this theatre isn't comic enough, you have to step back and see what CNBC is asking veteran reporters Becky Quick and Joe Kernen to do. They must, with straight faces, lob softballs at their Chairman in a live interview.

Am I the only person who thinks this is ludicrous and demeaning to Quick and Kernen? Does anyone seriously believe either veteran, capable, sane CNBC/GE online anchor will risk her/his career by being candid and hardnosed with their employer's Chairman and CEO on live network TV?

Does anyone seriously believe either will engage in the following hypothetical Q&A?

Quick: Hey, Jeff.....about our total return since you took over from Jack Welch. Why haven't you been able to beat the S&P500 in 4 out of 5 years? And why has our stock underperformed for the period during which you've been CEO?

Immelt: Good point, Becky. I'm recommending to the board today that they fire me and find someone to run the firm who can actually outperform the returns that my shareholders could get from simply buying a passively-managed S&P500 index fund. I can't, in good conscience, recommend that anybody assume the risk inherent in holding GE as a specific equity, when I've failed to return to shareholders what they could get with such an index fund holding.

Kernen: Hey, Jeff.....about this conglomerate we fondly call "GE." With the annual revenues and asset sizes of our disparate and unrelated businesses, don't you think the corporate function is essentially exacting a non-value-adding tax to pay your enormous salary, benefits and bonuses? Wouldn't investors benefit from spinning GE into its five separate businesses, each with its own listed stock, free of the financial yoke of your corporate functions?

Immelt: I'm glad you pointed that out, Joe. Yes, I think you are right. On second thought, I'll recommend to the board that they dismiss me as soon as I've split the firm into its trimmer, more enterprising separate components. I think I've demonstrated, over the five years I've been CEO, that my staff and I have actually destroyed value, not added any, for shareholders. Please help to stop me before I grab even more shareholder value for myself by underperforming the S&P and getting paid many tens of millions of dollars for it.

Quick: Wow, Jeff. Thanks for that breaking news on GE splitting itself up. You heard it first, here, on CNBC. America's Business News Network.

Immelt: Thank you, Becky and Joe. I'm just glad I can finally confess to being unable to create any consistently superior total returns for my shareholders after five years of being paid tens of millions of dollars to attempt the task. Now, I can retire and join Jack Welch in bidding for an old newspaper up Boston way. Nobody expects it to earn good returns for the shareholders, and it'll be a private equity buyout, so there won't really even be a publicly-available total return to worry about- so I think I'll be well-suited to that......

Well, I can dream, can't I? CNBC is more about entertainment than truth or news. This hypothetical exchange will never occur. However, you can vist my prior posts here, here, and here, to read more material supporting the comments in the hypothetical Q&A above.

As I've written before, though, if such an exchange did occur, now.....that would be news. Not to mention real hardball financial business reporting.