GE Investors Deserve More Straight Talk
There’s too much of a mismatch between GE-defined earnings and reality.
Some transparency could help with a transformation.
Photographer: Michael Nagle/BloombergIf it’s really out with the old at John Flannery’s GE, then its arcane and vague approach to reporting earnings needs to go.
Flannery has rolled out a bold transformation plan to shrink General Electric Co.’s eight major business units to four and vanquish the bureaucracy that’s been stifling the 126-year-old conglomerate. Many assumed this refresh would include a shift to reporting earnings per share on a GAAP basis, or something close to it, but Flannery’s purportedly improved method of reporting GE’s profit is just as disjointed as that of his predecessors. A bundle of puts and takes tends to make GE’s profit look better than underlying fundamentals would suggest, with Friday’s second-quarter report being the perfect example.