Turnarounds take a long time to be worked out. There is no better case of this than what we are seeing with General Electric (GE). GE stock is seemingly making new lows every single day.
The depth of the existing problems now being uncovered at General Electric signals the extent of the changes needed to be made in the company. They are significant.
It seems the news just keeps getting worse for GE, and with it, GE stock continues to falter.
Then throw into the mix the fact that some of the surfacing problems have come to light because of governmental probes, such as the SEC accounting probe in addition to a in depth Department of Justice lending probe. These issues suggest that the problems we saw just a year ago were the tip of the iceberg. Now it seems there is the possibility of growing, lengthy investigations into company practices.
Not only do these internal problems point to shortcomings in executive management, the current shake-up in GE’s board of directors points to major deficiencies in corporate governance and oversight. We believe this shakeup was desperately needed. One major concern we had was that a member of the GE board was the former Chair of the Securities and Exchange Commission, Mary Schapiro.
Obviously, previous management believed that GE would be doing things that had significant connections with the SEC because it saw to it that someone like Ms. Schapiro was on the board. Then again, the entire board is to blame for what we are seeing here. It is a mess.
It will take a significant amount of time. Accross social media and investing platforms, there is whining and complaining about GE stock. Folks, turnarounds take significant time. We are not talking months, or even quarters. This is going to take the better part of a decade. Look to companies like Bank of America, or GM. Minus the government intervention, the situations as it relates to timeframe are similar. This turnaround will take years. And as such, expect a similar timeframe for GE stock.
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