GE Stops Giving Quarterly Earnings Guidance

Jeff: is slowly learning to adapt to reality. This is good news since his GO BIG/GO GLOBAL strategy is not working and it needs to be refined. The "guidance approach" was never a good idea since it made CEO's focus on the short range and not look longer range. Again Immelt's move is positive and again HE IS ADAPTING... I only wish that he would stop being a "dreamer" and believe that he is right and the world is wrong... his article in the Economist on globalization is another illustration that he is a missionary...and even missionaries must be willing to accept reality and admit when they are wrong.

Bill Rothschild, author of the ONLY comprehensive, objective assessment of GE's past successes and failures...now in six languages...THE SECRET TO GE's SUCCESS.

I do respect Immelt for trying to do the right things. It is better to say nothing than to lie. BTW, why is GE still hanging on all these non-productive Master Black-Belts, a poor concept from Welch.

goood!!!

Finally, a large and still respected corporation is telling financial analysts "No more" to the demands for ridiculous earnings and quarterly guidance projections. I sincerely hope that other corporations take Immelt's lead and put their collective feet down and say "Enough" and end these foolish requirements. Immelt may have missed his numbers but who hasn't? The few that are still winning are very, very few and the cold hard reality has now set in at the corner offices. This is a global reset and it's time to get used to less revenue and less profit for at least 2-4 years. The smarter companies are going to hunker down and position themselves for the turnaround not just the coming squeeze. GE is making a smart move by no longer being beholden to analysts and fickle fund managers. All American corporations would be smart if they did the same thing.

Jeff,

Why the reduction in the long-term incentive bonus plan from 3 years to 2 years. You went the wrong way - It should be 5 years. Anything less is short-term thinking. If you really want to create a visionary leader; s/he must have the opportunity to fail and succeed in one operational component; before moving on to the next assignment. By the way - quarterly quidance should be completely made irrelevant - It focus' the leader's goals to the short term and negatively impacts long-term viability. The accounting can be too easily fudged. It's almost impossible to fudge 5 years worth of operational data. Kudos for retaining the company's legacy industrial units - Making things that people want to buy (and built in the U.S.) will make the company more valuable rather than less. By the way, Six Sigma and Kaizen are even more relevant in today's environment - It focus' one's mind on how your product and service are made; how else are you going to increase productivity???

I totally support Jeffrey' current move on (not) forecasting. I am however sure that like most moves, it is not a permanent move and GE will return to forecasting when environment and global economy is less volatile.

Ask anyone this year whose job involves forecasting, almost all of them have been wide off in this Annus Horribilis.

Just 5 months ago, Glodman (and many others) predicted oil at $200. Now their oil price forecast is $25.

I will urge BW to analyse quite a few forecasts made in 2008.

I am still waiting when the big cat will start laying off, I don't think they can become profitable just like that they have to control cost and the esiest way out for them is to make the work force leaner by laying off.

You'd be amazed how powerful Six Sigma and trained black belts are, when used correctly (i.e. starting with really listening to customers). I have worked for GE and I am now working for another famed global MNC in the technology sector. The difference is amazing; the team I'm with is struggling with things which would be a piece of cake for a trained black belt and a Six Sigma-aware team.

As the BusinessWeek reporter who covers GE, I agree completely that stopping quarterly earnings forecasts is a great move for Immelt, even if it is coming on the heels of a historic miss earlier this year. GE offered an interesting statistic in its presentation yesterday: Some 80% of companies in the S&P 500 revised quarterly earnings downward this year.

It's fascinating to think what the move will do to GE's culture. Clearly, the company is still setting aggressive internal targets, and promises transparency on its numbers at the segment level. But I think anything that removes the extraordinary focus on short-term quarterly earnings is a good thing for companies. It may lead to more volatility in the stock, but that's not where a CEO's focus should be anyways.

Jena, Thanks for joining in discussion.

It is noted that 80% of S&P 500 companies revised earnings downward this year.

You may agree that of the remaining 20%, only few would be able to beat their forecast or even last year' performance.

For the sake of everyone, Let us hope tough times end sooner than later.

Current period is already defined by some as - The toughest of our lifetime.

I sincerely hope it does not get any more worse from here on and starts improving.

Let us all do our best for this even if it means - Hope against Hope.