GE's credibility problem persists in the Culp era

GE's credibility problem persists in the Culp era

Larry Culp is the first outsider CEO of General Electric Co., and he could do more to behave that way.

GE did not hold a conference call on October 1, when it was announced that Culp, former CEO of Danaher Corp., would replace John Flannery as head of the company. GE's third quarter earnings announcement was its public debut this week. It got off to a good start: GE climbed ahead of the market when shareholders interpreted Culp's decision to cut the dividend to a penny as a sign that his turnaround efforts were not strained by respect for the company's legacy become. But things quickly went downhill as Culp and CFO Jamie Miller spoke to GE's profit call. The stock immediately reversed and continued to break in the next few days, closing below $ 10 on Thursday for the first time since 2009.

What was so daunting about the call was that it was a vintage GE: lots of conversation but little clarity. Culp divides GE's unkempt engine into two parts to achieve "more transparency and more accountability," but little of them has been seen in its performance so far. Open and transparent companies do not disclose the disclosure of an expanding SEC and the DOJ to their accounting practices in opening speeches on a solicited response, as was the case with GE. Let's recall that GE did the same thing in January when it first announced the investigation by the US Securities and Exchange Commission. The move hampered the credibility of Flannery and undercut Culps

It was also strange that CFO Miller was the one who made the disclosure. She has issued the January Notice and is obviously qualified to do so. Culp will certainly get paid enough. Miller then read off a series of potential upcoming horrors that could force GE to estimate additional funds for GE Capital in excess of the $ 3 billion already provided. This now includes a new accounting standard that could inflate insurance problems and the vague allusion to tax reform

To contact the author of this story: Brooke Sutherland at bsutherland7@bloomberg.net

To contact the editor responsible for this story: Beth Williams at bewilliams@bloomberg.net

This column does not necessarily reflect the opinion of the editors or the Bloomberg LP and its owners.

Brooke Sutherland is a Bloomberg Opinion columnist for deals and industrial companies. Previously, she wrote an M & A column for Bloomberg News.

© 2018 Bloomberg L.P.

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