GE CEO Warns of Risk of Depression

Discussion in 'Wall St. News' started by ByLoSellHi, Feb 6, 2009.

  1. I think he means other than GE's share price, too.

    GE chief warns on US depression threat

    By Francesco Guerrera and Justin Baer in New York

    Published: February 6 2009 02:00 | Last updated: February 6 2009 02:00

    The US economy is suffering its steepest downturn since at least the 1970s and could descend into a depression, Jeff Immelt, General Electric's chief executive, warned yesterday.

    He said businesses and consumers were struggling to contend with tumultuous markets and a financial services industry under siege.

    "Unlike the other downturns that I've been a part of, this one is faced with limited liquidity," Mr Immelt, GE's chief since 2001 told a conference. "Once you break through '74-'75, you don't stop 'til you get to 1929."

    When asked whether he would call the current slowdown a recession or a depression, Mr Immelt joked that he would need to refer to his college economics text book for a precise answer but said "it is one of those".

    He contended that governments were "firing as many bullets" as they could to stimulate economic growth and stabilise the credit markets. Those measures, he said, should begin to take hold by early next year.

    "Governments are all in," he said. "And in my view, government always wins."

    GE remains one of the world's largest and most-profitable companies, with operations in dozens of countries and an array of businesses that range from aircraft engines and medical-imaging equipment to cable television and lightbulbs. Yet the unfolding credit crisis has crimped profit at GE's own financial services business, raising concerns for the company's strategy and once-unquestioned financial strength.

    GE has responded to the crisis with steps to shrink the finance arm, GE Capital, and its funding needs. But unlike GE's response to the early 1990s downturn, Mr Immelt said the company would not rebuild GE Capital through a spate of acquisitions of distressed assets. Any likely acquisition targets would instead augment GE's industrial businesses.

    At the discussion, which was hosted by the Wall Street Journal, Boston Consulting Group and IESE Business School, Mr Immelt reiterated that he would not cut GE's stock dividend or veer away from a plan to run GE as a company with a triple A credit grade, even if ratings firms eventually opt to lower its debt.

    Copyright The Financial Times Limited 2009
  2. ... IT'S ONE OF THOSE???? That's a big fucking difference.

    :eek: :eek: :eek: :eek: :eek: :eek: :eek:
  3. If and when GE trades at $10/share, it's "all over". We'll see. :cool:
  4. I'm not old enough to remember '74-'75, but this one feels like the Asian financial crisis, Russian debt default, the tech bubble and Enron all rolled up into one. As a matter of fact, it's probably exactly that since each financial crisis rolled over to the next.
  5. patchie


    Immelt is your classic CEO. More than 50% of GE was GE Capital (ie. liquidity provider) so if there is a crisis of liquidity GE is part of the problem.

    Furthermore, as our nation is in a crisis of confidence, instead of reinforcing the US workforce, these CEO's terminate jobs to secure their personal compensation levels. GE has the cash to invest in development and technology but instead of using it to secure jobs, GE is cutting such investments and turning employees loose.

    I wonder, when exactly will the board recognize that since 2000 Immelt has underperformed near all of his peers in providing shareholder returns.
  6. The more I ponder Immelt's comments, the more I am in awe that he actually, publicly made this statement:

    "Once you break through '74-'75, you don't stop 'til you get to 1929."