General Electric's embarrassing earnings miss highlights what? Jeff Immelt's propensity to shift blame?
Francesco Guerrera & Justin Baer | "Shocking GE result ..." | Financial Times | 11 April 2008
The Lex Column | "Electric shock" | Financial Times | 11 April 2008
Francesco Guerrera & Justin Baer |"Embarrassed Immelt faces up..." | Financial Times | 11 April 2008
Yes, there's a weakness for shifting blame. But there's another, special American sickness -- the industry of Managed Earnings. Dialing in a penny or two above the "analyst guidance" is a habit which always comes back to haunt companies. It reduces volatility in the stock but projects a certitude of management control of the business that's an illusion, a lie; particularly in something as complex as an industrial conglomerate.
Note that Jeff Immelt pinpointed GE's inability to close asset sales between the Bear Stearns meltdown and the end of 1Q.
Fielding hostile questions from analysts, Mr Immelt said the collapse of Bear Stearns days after the webcast and subsequent market turmoil prevented GE selling real estate.
Although there were other writedowns attributable to bad financial assets, the remark suggests GE habitually relies on Extraordinary Items (a euphemistic accounting term of art), including asset sales, to hit the "whisper number".
This should be another wake-up call the investor class that NO ONE IS DRIVING THE BUS.
Jeff Immelt gets paid the big bucks to pretend. And this is pandemic across American business. This is so because investors crave the illusion.