Immelt Is Back to Making Promises

Having just failed to deliver on one of his promises (10 percent earnings growth), Jeff Immelt, CEO of GE (GE), is back to making promises (5 percent earnings growth!). I really like Elizabeth Nowicki's take on the matter: "stop making promises". He sounds like an untrustworthy lover in times like these, that thinks more promises is a substitute for promises unkept:

Memo to Immelt: Earnings do not have to grow each year. In some markets, in some economies, in some industries, in some “downturns,” simply having earnings – any positive earnings – is a good thing. Matter of fact, sometimes earnings should NOT be growing each year. Were I a GE investor, I would not want Immelt promising 5% growth for 2008 because I would figure that the only way he can promise to hit that number in such an uncertain market and gloomy economy is by committing to fudge year-end 2008 numbers if needed. And, as we learned several years ago, fudging year-end numbers tends to catch up with companies, and, when it does catch up, the valuation fall-out is worse than if the forthright disclosure (e.g. “2008 earnings might be flat”) had been made initially. Am I the only one who remembers back to the not-so-distant past, when unrealistic promises made to analysts by corporate officers led to companies cooking their books at year end to make the numbers? As I recall, things did not always work out so well in those cases. Enron, anyone?