Lights Out: Pride, Delusion, and the Fall of General Electric

by Thomas Gryta

If the shares fall, buying back shares is little different than simply setting the cash on fire. Paying a dollar for something that will be worth 80 cents in the future isn’t a great way to spend someone else’s money. Jeff Immelt will not be remembered for wisely deciding how to spend GE’s cash. Buybacks were a regular fixture under Immelt, who spent more than $108 billion on them after 2004, when the SEC required companies to disclose their practices. At the end of 2018, GE’s entire market value was $67 billion. In Immelt’s last eighteen months as CEO, he spent almost $26 billion in cash on repurchases even as the stock fought to stay near $30 during that period. Just fifteen months later, it had dropped below $10.