Maybe you can say that Immelt shouldn't have been so reliant of GE Capital. But if you're going to make that argument, then don't you have to say the same about Welch? What the Ken Langones of the world won't acknowledge is that their man Jack had the wind at his back. And Immelt didn't.
In fact, Immelt had been trying to get more earnings out of the company's industrial divisions rather than GE Capital; he doubled R&D spending, for instance. Still, as James Surowiecki noted in the New Yorker, "Dependence on finance was a hard habit to break." (Indeed, GE paid a $50 million fine in 2009 after the Securities and Exchange Commission charged that the techniques it used to smooth out its earnings violated accounting rules. GE Capital was the tool it used to smooth out earnings.)
Yet from March of 2009, when the stock bottomed out, to July of 2016, the stock once again rose remarkably, nearly quintupling in price. During that time, Immelt sold off most of GE Capital, and as many pieces of GE's insurance business as others would buy.
He bought a power business from Alstom, the French railway company, and an oil and gas equipment firm, which he merged with the company's Baker Hughes division. He shed NBCUniversal, GE Water, GE Appliances and dozens of other businesses.
And he bought back stock. Lots and lots of stock: some $29 billion worth during his last three years, according to the Journal. In the fall of 2015, Trian Fund Management LP, the hedge fund run by the shareholder activist Nelson Peltz, bought about one percent of the stock. It did so not because Peltz was critical of the company but because he felt that GE under Immelt had undergone a transformation that investors had failed to notice. Trian's primary recommendation: more stock buybacks.
From then on, the stock basically bumped up and down until Immelt left. His biggest mistake, it seems clear, was his failure to see that GE's power unit was in trouble--and that the Alstom deal was mistimed. When Immelt finally had to acknowledge a big earnings shortfall, his credibility was damaged.
But I also think that he wound up being spooked by Wall Street's incessant demands that he get the stock price up, which caused him to make earnings promises that turned out to be impossible to keep.
Critics point out that the stock fell 25 percent during Immelt's 16 years. But when he took over, GE stock had a multiple of about 40. When he left it was still in the mid-20s. Do you know what Apple's multiple is? A little over 18. GE is not, and never was, a growth company, Jack Welch notwithstanding. It needed to return to a multiple more befitting a 126-year-old conglomerate that people own primarily for the dividend. That, in large part, is what's been happening.
Here's a final chart, which tracks GE stock during John Flannery's first year as chief executive.