Source: The Wall Street Journal
A culture that disdained bad news contributed to overoptimistic forecasts and botched strategies
Jeffrey Immelt, the longtime boss at General Electric Co. , was a polished
presenter who held court each year at a waterfront resort off Sarasota, Fla., where industrial executives and Wall Street listened for his outlook on the conglomerate.
“This is a strong, very strong company,” Mr. Immelt said at the event last May.
On that Wednesday morning, though, he looked shaky to some people in attendance, running quickly through highlights of 27 slides in the ballroom of the Resort at Longboat Key Club. He defended his long-held 2018 profit goal, an optimistic benchmark Wall Street had long abandoned.
“It’s not crap. It’s pretty good really,” he told the room, referring to GE’s recent financial performance. “Today, when I think about where the stock is compared to what the company is, it’s a mismatch.”
It was a mismatch. On that day, GE shares were trading near $28. They would go on to collapse over the next six months while the stock market set fresh records. Today, they trade below $15. Read the rest of this entry »