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Jeffrey Immelt, Chairman and Chief Executive Officer of General Electric Co. (NYSE:GE), stated on a conference call with security analysts on Friday, "We end the year with momentum."

The price of General Electric stock declined by 0.62 points on Friday, down by 2.28 percent.

The Wall Street Journal report on the General Electric performance led with the headline, "GE Misses Key Target for Earnings."

Profits in the fourth quarter were up by 4.8 percent, but "it fell short of its pledge to improve the operating profit margin in its industrial businesses."

"GE had set a goal of improving its industrial operating margin by 0.7 percentage point last year. To do that, it aggressively cut costs, trimming $1.6 billion of expenses last year….In the end, the company came up short, posting an improvement of just 0.66 percentage point excluding acquisitions."

In other words, if the Journal article is correct, Immelt and GE got punished for missing the aimed for operating margin by 0.04 percentage point.

This failure to meet expectations may or may not account for Friday's decline in the price of GE stock. But, I think there is more going on here.

I recently wrote a post about General Electric and made the following comment:

"Investors do not seem to believe that GE…and Jeff Immelt…have a clear picture of where they are going in the future...how GE might return to an organization that has re-gained its competitive advantage."

Part of the problem is presenting the story of an industrial conglomerate. It is very difficult to understand a conglomerate and, hence, very difficult for the company, especially the CEO, to present a coherent picture of what is going on in the mix of companies that belong to the conglomerate.

In recent weeks, "the press" has basically bifurcated the company into the industrial segment as opposed to the financial segment. Mr. Immelt has contributed to this vision by stating that he wanted to reduce the financial segment of the company to where it was providing 30 percent or less of GE's profits.

This emphasis is picked up in the headlines of the New York Times "General Electric's Industrial Segments Lift Earnings." The article starts off by examining how the industrial component contributed to the fourth quarter earnings. This was later followed by a paragraph on how the "financial business" was doing.

And, that is how the discussion of the GE performance was framed.

Mr. Immelt has wanted the industrial segment of GE to contribute a greater part of the total earnings of the company relative to the contribution of the financial segment.

You can't do a whole lot with that.

I mean General Electric has not earned much more than 13.0 percent on shareholders equity since 2008. The leader of General Electric has not given a concrete picture of what his company is going to be that the investment community can grasp hold of and positively respond to. The price of GE stock basically followed a flat line up until the financial collapse. The stock price dropped during the crisis and, although it has recovered some during the current economic recovery, it has not yet reached the level of the flat line it was tracing before the recession despite the strong post-collapse increase in the general stock market.

General Electric, to me, finds itself in a position where the leadership of the company is unable to deliver a clear, believable picture of the future of the company that shareholders can own and backs up this fuzzy image with actions that only present an unclear use of the firm's retained earnings.

In other words, the picture of the future of GE given to the investment community by Mr. Immelt is ambiguous, at best, and investors cannot get excited about it. And, the actions of Mr. Immelt don't provide any further clarification of what that picture might be.

Mr. Immelt claims that "We end the year with momentum," and the stock market responds, "momentum toward where?" And, the price of GE stock declines.

I am sure the General Electric management blames the investment community for the performance of the stock. I don't know how many CEOs I have heard state that the markets don't understand them. My response to this world view is that of Stephen Covey: "As long as you think the problem is out there, that very thought is the problem."

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Source: GE's Immelt: 'We End The Year With Momentum'

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