Monday, January 22, 2007

The Fall of GE

And now GE Plastics is for sale…

As recently as the year 2000, GE, and in particular, its CEO Jack Welch could do no wrong.  Jack would say that managers should pat their tummies three times a day and BOOM! that week he would be on the cover of 5 business weekly magazines, with everybody cooing and ahhing at the brilliant insight.  GE mangers were also considered nearly as brilliant…until they left and tried to pass off the GE model on other companies.  Jim McNerney  and Robert Nardelli immediately come to mind.  3M and Home Depot could not believe their luck at getting these guys and were willing to pay the price of a moonshot for them  - $210 million in Nardelli's case.  Both have now left after several years of accomplishing nothing as the stock prices show.

So now the crib of Jack Welch and his prodigy Jeff Immelt is up for sale.  Considering the performance of GE stock under Immelt's reign (from ~ $52 down to the current ~$37), maybe something else is the issue.  Heck, anybody can look good if they sell off the slow performing divisions.  Does that make someone a great CEO?  Maybe so, since Jack's first nickname was Neutron Jack (he got rid of the people and left the buildings standing).


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