Buffett made clear his disdain for so-called creative accounting, branding it"disgusting" and"one of the shames of capitalism" in his yearly missive.CEO has previously bemoaned the rise of this type of financial fiddling. He has pinpointed one-off restructuring charges and merger-related adjustments as two common ways to massage figures and mislead investors.
Welch went a step further. He made it his mission to beat Wall Street's forecasts, and deliver slow, steady growth that would secure a higher valuation for GE stock. He oversaw 40 quarters, or 10 years, of uninterrupted earnings growth during the 1980s and early 1990s. The utilities titan also adjusted the expected rate of return from its pension portfolio, and tweaked the values of assets it acquired. In a similar vein, it once pulled out $2 billion from the reserves of its insurance subsidiary to avoid reporting an earnings decline, Cohan said.
"I'm not manipulating earnings," he told Cohan."You have to be an idiot to miss a Wall Street estimate."
Dear Mr.Buffett: So you are upset, no one ever hears from you until you lose revenue!
I worked inside GE Capital at the end of Welch's tenure. The culture of focus on quarterly earnings destroyed the company long term, while generating huge bonuses for management. It also invited all of the world's worst characters to become GE's business partners.
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