MEDIA: Media Watch - Can GE's Immelt keep bringing good things to life?

The media reacted with little surprise over Jack Welch's announcement that Jeffrey Immelt would be taking over as CEO of General Electric.

The media reacted with little surprise over Jack Welch's announcement that Jeffrey Immelt would be taking over as CEO of General Electric.

The media reacted with little surprise over Jack Welch's announcement that Jeffrey Immelt would be taking over as CEO of General Electric.

The biggest question seemed to be whether or not Immelt's accomplishments as the new chief executive would be successful enough to meet the extraordinarily high expectations of analysts and shareholders.

Most analysts and journalists feel that Immelt is up to the challenge of keeping GE on the right track financially. As president of GE Medical Systems, Immelt has overseen one of the parent company's best divisions, and as Welch is planning to stay on until the Honeywell acquisition and integration is completed, most analysts predicted a smooth transition.

Some speculation arose on the difficulties Immelt would encounter if he were unable to step out from behind Welch's shadow. 'He's following a legend,' noted analyst Steve O'Neill. 'No matter what you do, you're going to be compared to Welch.' (New York Post, November 28).

Many articles focused more on Welch's GE success than on Immelt's prospects, reinforcing the argument that Immelt may remain in Welch's shadow for quite some time. 'He'll (Welch) go down in history as one of the best corporate managers,' said Thomas Leritz, Banc of America analyst (Times Union (NY), November 28).

In fact, CARMA research has shown GE's management is the most often discussed topic over the past year. Furthermore, in discussions of corporate management in the media, GE ranked third of 500 companies analyzed, behind Lucent Technologies and DaimlerChrysler.

Welch was credited with transforming GE from an old-economy manufacturer to a widely diversified services company, noting divisions such as NBC.

In Immelt's favor, it was also pointed out that this superior management style will ensure continued management success at GE, as Immelt has intense company loyalty and a customer-focused management style.

Irrespective of his qualifications, most articles agreed that Immelt has very high expectations placed upon him, due to both Welch's management abilities and GE's financial success over the past 20 years.

'The pressure will be on Immelt to continue the acceleration of earnings growth. I think it will be very, very difficult to pull that off,' stated Standard & Poor's analyst Richard Friedman (Milwaukee Journal Sentinel, November 29).

While some articles noted that this task is nearly impossible, many others pointed out that both Immelt's best chance for success and biggest challenge will be creating a distinctive long-term strategy for GE, instead of simply pursuing Welch's goals.

Although Welch is planning to stay on throughout the Honeywell acquisition, many analysts saw the merger as Immelt's first real test as leader of the company, noting that the responsibility for the success of the integration falls to him alone. Analysts were concerned about Immelt's weakness in the aerospace sector, which might affect his ability to manage the combined company, but others expressed confidence in his versatility as a leader.

While questions might remain about Immelt, investors seem happy with the choice. Welch was again credited for the bounce in the company's stock due to his 'surprise-free' relationship with financial analysts.



- Evaluation and analysis by CARMA International. Media Watch can be found at www.carma.com





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