General Electric on the Prowl for Financials
August 19, 2008 by Robert Barr
Filed under Political Commentary
- GE CEO Jeff Immelt may be preparing for a shopping spree
Let me start by saying that I have always been a fan of GE. It is a great American story. A behemoth of a conglomerate that has been as nimble as a startup. Jack Welch took General Electric to new heights during his rein as CEO. Sure, he made plenty of enemies in his day, but for the most part you cannot compare any modern era business leader to Jack.
Current CEO and Chairman Jeff Immelt hasn’t fared as well. But this isn’t going to be a bitch session on Jeff. He has held his own in a completely different market than the one Jack operated in. For starters, it’s tough to be a major international manufacturing company when everyone is going green and Mr. Immelt has done a great job with the Ecomagination thing they are doing.
However, this post is about the financial side of GE, or more precisely, GE Capital. Mr. Immelt said yesterday that GE is going to be very active in making acquisitions in the troubled financial services industry. To that I say Amen brother!
Why?
Because it’s obvious these effing guys on Wall Street can’t figure out how to run a financial services company for more than a quarter without running the friggin thing into the ground. Here are some comments from Jeff yesterday on CNBC:
“We’re going to do deals right now in financial services that will fuel earnings for years,” Immelt told CNBC’s Carl Quintanilla in an exclusive interview from the Beijing Games, which NBC is broadcasting. “If you’ve got some cash, if you have a strong balance sheet, this is as good of a time you’re going to see.”
“We made more than anyone else in the fourth quarter last year,” he said. “We made more than anyone else in the first quarter last year; Bank of America was the only company that made more than us in the second quarter.”
Again Amen. This is how small companies think. Nimble, quick, strike while the iron is hot. When your competitors are shrinking violets, you expand, grab market share, and put them out of business.
That may sound a bit ruthless in this new age, room for everyone, don’t keep score at my kid’s soccer games world we live in, but that is fantasy and doesn’t portray the true realities of business life. But what the hell do I know; I am just a dumb sales guy.
Bill Rothschild on Tue, 19th Aug 2008 6:46 pm
Strategy is what you do and not what you say!!!
This has been my message to my clients for the past 30 years and it is still a key success factor. Jeff Immelt and his dream team have never learned that you can’t say one thing and do something else. Financial services became the core of Jack Welch’s success and it was clear GECapital had become too big. Immelt took steps to neutralize the power and even to reduce GE’s dependence on this sector. But now he has not only recreated the GECapital sector but has stated he wants to “pick up deals”…what is the strategy?
Bill Rothschild, author of THE SECRET TO GE SUCCESS and GEWATCH BLOG…(WWW.STRATEGYLEADER.COM).
Robert Barr on Tue, 19th Aug 2008 8:27 pm
Bill,
You don’t give yourself enough credit! What do you have ten or eleven books out there? I am honored that you would stop by my little corner of the world.
I would imagine the thinking behind moving back into the financials is the same as it was for Jack, high margins and a lot less labor intensive than making refrigerators and jet engines. Not to mention he can pick up some pretty strong assets on the cheap.
However, I see your point and Jeff is doing something that Jack didn’t have to do…chase earnings. He has done it from day one. Mr. Immelt feels the heat and knows his ass is on the line every quarter where Jack could make plans for the future and not have to worry so much about his position within the organization.
Jeff is managing by fear, anyone can see it. Which is why I thought coming out and boldly stating that he was going to move aggressively into the financials was out of character for him but a strong move none the less.
Robert Barr, author of nothing but thanking an accomplished business leader and writer for stopping by Blabrmouth.com!