Wednesday, March 04, 2009

Didn't Know Jack

And it's true: Jeff has had 7 years to reduce GE's dependence on the business that is sinking the ship--GE Capital--and he has chosen not to do so.  Until last fall.  When it was too late.

But let's not forget who built GE Capital in the first place: GE's legendary CEO, Jack Welch.

True, Jack Welch left the company eight years ago, but his legend--and legacy--live on.  Thanks to Jack, Jeff inherited a company that was highly dependent on a financing business, one that already carried more than $300 billion in debt.  (The total is now more than $500 billion). 

It was in no small part this debt load that allowed Jack Welch to post his legendary (and eerily consistent) earnings numbers over his 20 years at GE's helm.  It is also this debt load that is crushing GE shareholders today.

GE's round-trip from $7 to $40+ to $7 has now eliminated much of GE's stock appreciation during the legendary Welch's reign.