At GE, Transparency Comes in Fits and Starts

General Electric Co. still has things to learn about transparency.

I’ve long held that a true recovery for the struggling industrial giant must entail a restoration of credibility and a reckoning with the tendency toward obfuscation that allowed its cash-flow and balance-sheet challenges to lurk beneath the surface for so long. GE has made some progress on this front – including overhauling its board, hiring a new head of investor relations and opening the door to hiring a new auditor – but it’s also made some missteps that have left me wondering what the company was thinking. The latest of these came to light on Wednesday when Chief Financial Officer Jamie Miller acknowledged that one of the ways GE presented orders booked at its power business in the first quarter may have created some “confusion.”

GE touted 4.5 gigawatts of power-equipment orders on its earnings call. Miller had said at the time that these were orders for heavy-duty gas turbines, a market that has seen a significant plunge in demand. JPMorgan Chase & Co. analyst Steve Tusa questioned that statement in the wake of the call, saying in a note the math just didn’t make sense, given that GE said it had booked only three of its higher-wattage H-class turbines in the period. Then, when Miller was asked about this at a Goldman Sachs Group Inc. conference on Wednesday, she clarified that GE was referencing orders as defined by industry data firm McCoy Power Reports. This includes not only heavy-duty gas turbines but also orders funneled through joint ventures and aeroderivative models. The 4.5 gigawatt count also appears to include some orders that were already in GE’s backlog at the end of 2018, meaning that’s not all new business.