Immelt's GE Continues To Struggle

Having recently talked with some friends who read this blog, I am now aware that there are readers who consider some of my posts to be 'rants.' Such as this recent one about Jamie Dimon's wrong-headedness regarding the current, strict application of a narrowly-specified 'mark-to-market' accounting rule.

It's safe to say that my attitude toward CEOs and other grandees tends to be, well, sceptical.

Perhaps because I've met enough of them in my career to know that the bulk of them did not rise due to merit. Or maybe it was due to my boss at Chase Manhattan Bank, Gerry Weiss, making sure that colleagues of mine, and I, had lots of exposure to senior bank executives, the better to learn just how mediocre most of them were.

In any case, I'm not especially reverent to just anyone who heads a large company, but a CEO who can consistently outperform the market's total return usually gets positive remarks from me. In contrast, a CEO who can't usually gets negative remarks.

Thus, I'm not particularly impressed with the current CEOs of Chase or Citigroup. Both Dimon and Pandit seem to have lucked into their positions, rather than earned them via long and consistently superior management of some other business or company. Neither is the sort of CEO I'd prefer to be at the helm of one of the largest US commercial banks during this time of extreme stress in that sector.

Today, I touch, again, upon a similar, frequent topic on my blog: GE's hapless, inept CEO, Jeff Immelt.

This time, following on my last post about him and his company less than a month ago, once again, GE's financial business exposure has cost its shareholders plenty.

As I wrote last month,

"Suffice to say, though, that if GE didn't have its huge financial unit, it would not have experienced such a severe recent decline in its stock price and, its total return."


Sadly, judging by the nearby, 5-day price chart for GE and the S&P500 Index, it's true all over again.

In only five days, GE's stock price dropped almost 10%, while the index held steady. It seems that continuing troubles in the financial services sector have exposed all of GE, due to its needlessly-diversified structure, directly to the consequences of the current credit market woes.

Looking at the last 12 months of price performance, as depicted by the second chart, GE has lost about half of its value, while the S&P managed to drop by a lesser amount, 40%.

As I've written frequently in prior posts, if Immelt had broken up GE sometime during his futile, value-destroying 6+ year reign, most of GE's businesses would not have been tarred so heavily with the financial sector brush.

Good job, Jeff.

Once again, your stodgy, 'play it safe' mentality has seriously hurt your shareholders.

How much more of this will it take before GE shareholders push the company's board to oust this underperforming CEO?