GE Heaps Praise on Exiting Immelt

Let’s hear it for Jeff Immelt, the outgoing CEO of General Electric, for driving the old-line conglomerate into the modern age. GE today announced his exit from the helm, effective Aug. 1.

The 61-year-old executive took over for “Neutron Jack” Welch, an executive revered on Wall Street for the earnings machine that he headed. Welch geared his gameplan to a serial acquisition strategy (e.g., GE acquired RCA—parent of NBC—in 1985 for a then whopping $6.3B) coupled with shedding workers.

GE, according to Welch’s book, “Straight from the Gut” slashed employment from 411,000 in 1980 to 299,000 five years later. Fortune crowned Welch the best CEO of the 20^th Century. He was a man of his time.

Immelt is a man for our time. Jeff though was cursed with a huge dose of bad timing. He took the helm Sept. 9 just before the 9/11 terror attacks, which sent GE’s markets and stock price into a tailspin.

Things worsened in October as GE’s $40B acquisition of Honeywell, which was engineered by Welch, collapsed due to opposition from European regulators.

Immelt assumed the top post when conglomerates, such as GE, fell out of fashion. That triggered the dismantling of much of the house that Jack built. Immelt moved to refashion GE into a leaner and more focused operation.

GE jettisoned its huge plastics operation for $12B and unloaded a 49 percent stake in NBCUniversal to Comcast for more than $16.5B.

Since the 2007/2008 financial meltdown, Immelt has been winding down GE’s massive finance arm, which was labeled a “systemically important financial institution” or too big to fail operation by Uncle Sam. That designation loaded GE Capital with burdensome requirements that hindered corporate profits.

The beginning of the end for Immelt may have begun two years ago when billionaire investor Nelson Peltz acquired a stake in GE and began pressuring the company to cut costs.

GE though said Immelt’s exit had been in the works and that his departure has absolutely nothing to do with Peltz’s investment. There is no reason to doubt the Boston-based company.

The company’s announcement though sings the praises of its exiting chief. He’s hailed for the “successful transformation of GE into a simpler, stronger and more focused digital industrial portfolio aligned to key markets—power, aviation, transportation, healthcare and oil & gas.”

During his tenure, Immelt, “re-established market leadership based on technological innovation, grew a strong share position in essential industries and built a backlog of $320B,” said GE.

The company’s statement sounds as if it is hiring Immelt, rather than replacing him with John Flannery, current CEO of GE Healthcare.

Good luck to Flannery. He has big shoes to fill. You can bet you haven't heard the last of Immelt.