Don Dion's  Instablog

Don Dion
  • on IPO Analysis
Send Message
Don Dion (, @DRDInvestments) is the owner and Chief Investment Officer of DRD Investments, LLC, based in Naples, FL. and Williamstown, MA., a family office focused on managing a long/short hedge fund, real estate assets, venture capital, and various other financial assets for... More
My company:
Drd investments, llc
My blog:
Don Dion's IPO Analysis
My book:
The Ultimate Guide to Trading ETFs
  • Should General Electric's Jeff Immelt Go Out To Pasture?  1 comment
    Apr 21, 2014 8:27 AM | about stocks: GE

    Is 20 Years Too Long?

    Chief Executive of General Electric (NYSE:GE), Jeff Immelt, will have led the company for 13 years this fall. When Immelt assumed leadership in September 2001, it was assumed that he would be a "20-year man". This would have placed his retirement at 2021.

    Although this long period of service may be unusually for a giant multinational, it is not unusual for GE. The company has had many long serving CEOs. The expectation that a CEO could work that long and be highly effective was set by Immelt's predecessor, Jack Welch, who served for 20 years.

    However, these expectations are now being challenged by board-members as unrealistic. It may be too long for any one person to lead a company as big and diverse as GE. It takes an enormous amount of effort to run a $258 billion multinational, with subsidiaries in 170 counties, and goods as diverse and unrelated as light bulbs and jet engines. The life of a CEO at GE today is a far more complicated affair than during Welch's time. Now, a GE chief has more complex, global business situations to deal with, during a time of less economic certainty-not to mention political upheavals.

    While Immelt has not made any public statements to the effect that he will not go the full nine yards, there is an increasing belief among his fellow board members that at age 58, he is not going to be able to stay for a term of 20 years. In fact, under his leadership, GE stock has not stood out from the overall market.

    Immelt's Performance

    The board is not faulting Immelt for this performance as he has done a good job re-positioning GE during challenging times. For example, Immelt has overseen the re-focusing of GE on its core businesses by working on spinning off GE Capital.

    The real issue is not whether Immelt should leave because he is missing expectations (Immelt received a bonus for good performance in 2013.), but whether he will be able to stay the course. Pictures of Immelt from when he first assumed chief in September 2001 vs. now reflect years of grueling decisions.

    Younger Candidates

    If GE adopts the philosophy that 10-15 years as CEO is more appropriate, then those, who are not currently in the early 40 year age bracket, become more attractive. Current candidates include Lorenzo Simonelli, in his early 40s, who is currently in charge of the company's oil and gas division; Steve Balze, 50 years of age, who is currently in charge of the company's power and water division; and Keith Sheffin, 55 years of age, who is currently in charge of GE Capital.

    Meanwhile, should anything happen to Immelt before he steps down, John Rice, 57 years of age, the current Vice President, will be able to take over leadership.

    Conclusion for GE Investors

    Investors should feel confident that Jeff Immelt has steered GE back on course, post-recession, and post a period of somewhat unfocused expansion. GE stock should continue to see strong, steady growth-under both Immelt, and several of his potential successors.

    (click to enlarge)


    With the spinoff of GE Capital and a renewed focus on core businesses, GE is leaner and more flexible to move forward in 2014 and should see a boost from the continued recovery of the economy.

    We recommend investors hold or take positions in GE for continued gains in 2014.

    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.

    Stocks: GE
Back To Don Dion's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (1)
Track new comments
  • eftvox
    , contributor
    Comments (232) | Send Message
    Agreed with your conclusion but +/-1% is not enough. Let's see if we get to $27 by end of summer!
    21 Apr 2014, 09:18 AM Reply Like
Full index of posts »
Latest Followers


  • $CXRX Expect CXRX to trade in sympathy with VRX today
    Aug 11, 2016
  • $DLTH Quiet Period Expiration is Today. Look for stock to power up.
    Dec 15, 2015
  • $HELE Expect upward move after the close today due to expected revenue and earnings beat
    Jul 9, 2015
More »

Latest Comments

Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.