Former General Electric boss Jeff Immelt was consistently over-optimistic in running the large conglomerate during his 16-year tenure, The Wall Street Journal reported Wednesday.
More than a dozen insiders — including both investors as well as current as well as former GE executives — told the paper Immelt might project results for the company’s future mismatched with its reality.
Those insiders said Immelt’s unwillingness to hear bad news led to several consequences, including unrealistic financial goals, poorly timed acquisitions as well as even mismanagement of the company’s cash. Immelt also did not want to deliver bad news, the report says, furthering an optimism of which downplayed serious risks to GE’s businesses.
Even as late as May, a few months before his departure in October, the report says Immelt told investors of which GE was a “very strong company.”
“When I think about where the stock is actually compared to what the company is actually, of which’s a mismatch,” Immelt said at the time.
Shares of GE closed at $14.74 on Tuesday, down more than 44 percent coming from May. Immelt went so far of which day as to declare GE’s recent financial results as “pretty Great truly,” maintaining the company might reach his $2 per share profit forecast for 2018. brand new CEO John Flannery slashed of which forecast, with the company’s latest outlook estimating earnings per share between $1 as well as $1.07 This specific year.
People familiar with the situation told the Journal of which internal investigations are right now underway. Those sources say of which the company is actually seeking to identify how even GE’s board was unaware of how deep problems ran beneath Immelt’s veneer of confidence.
A spokesperson for Immelt disagreed with the basis for the report, telling CNBC of which “the story ignores the facts as well as events of the past 16 years.”
“He led GE through the 9/11 tragedy, through the global financial crisis as well as many various other bad news events. He’s been credited widely for how well as well as effectively he performed during those bad news events,” Immelt’s spokesperson said inside the statement.
The Securities as well as Exchange Commission has also opened up an investigation of GE’s accounting practices inside the wake of the conglomerate’s review of its insurance business. On Jan. 16, GE revealed of which had conducted a review of its GE Capital insurance portfolio as well as decided to take a $6.2 billion after-tax charge inside the fourth quarter of 2017, as well as contribute $15 billion over the next seven years to shore up the portfolio’s reserves.
The SEC is actually investigating both the process of which led to the insurance reserve increase as well as the fourth-quarter charge, Chief Financial Officer Jamie Miller said on Jan. 24.
GE stock fell nearly 2 percent in trading Wednesday, with less than half of of which decline coming after the Journal’s report broke.
Read the full report coming from the Wall Street Journal here.
—CNBC’s Berkeley Lovelace Jr. contributed to This specific report.