The Five Dumbest Things on Wall Street

2. Jack Welch: GE's Old Yeller

General Electric's GE whiz-kid CEO, Jeff Immelt, described himself at the company's annual shareholders' meeting on Wednesday as "a complete believer in our company and our strategy."

If you think that's a little creepy, consider the reaction to GE's first-quarter results on national television from Immelt's mentor, Jack Welch: "I'd be shocked beyond belief, and I'd get a gun out and shoot him if he doesn't make what he promised now."

Welch, who handpicked Immelt to succeed him, lost his cool and showed a flash of brutal honesty on CNBC when he said that Immelt has a credibility problem.

"Here's the screw-up," said Welch. "You made a promise that you'd deliver this, and you missed three weeks later."

After sounding a bullish note about GE's first quarter in mid-March, Immelt was caught with his pants down when he recently reported earnings from continuing operations of 44 cents a share for the period, down 8% from last year and well below expectations on Wall Street for 51 cents.

Perhaps most alarming, GE's commercial-financing unit, which had seemed to be weathering the credit storm, posted an operating profit that was down 20%. GE, the perennial manager of earnings and expectations, had given no indication that such a decline was in store, and it now says that this year's profit from the unit will be down 5% to 10%.

As soon as the publicists got their hands on Welch, the retired corporate chief whose book title --"Straight From The Gut" -- is now a personal creed for Comedy Central's Stephen Colbert, backpedaled from his comments. By then, however, everyone knew how he really felt.

The problem for Immelt and Welch is that both their fingerprints are all over the financial mess at GE, and credibility is not a new issue for the sprawling industrial conglomerate. When the credit crisis struck Wall Street last summer, GE shares were trading at about $40. That's right about where they were seven years earlier when Immelt was chosen to succeed Welch at the company's helm.

So, shareholders had already grown impatient, and many have been pounding the table for GE to sell off NBC Universal and other assets to free up its higher-growth businesses. Now, the shares are trading at just $32, and shareholders are getting downright furious.

So, Immelt is in trouble, but is Welch off the hook? This is a man who was recently trying to buy The Boston Globe of all things. Before that, his unseemly divorce proceedings revealed his "stealth" compensation. Unbeknownst to them, shareholders were paying Welch a retirement stipend of $734,000 ... per month. His other retirement benefits, valued at $2 million per year, included a New York apartment with daily flower deliveries and wine, along with unlimited use of the corporate jet.

So if you're mad at Immelt, consider his rival for the job, Bob Nardelli, who was ousted from Home Depot HD after shareholders discovered that he gleaned $245 million over his five years with the company while the stock dropped 12%. He now works for Cerberus Capital Management, running Chrysler into the ground, so remember, it could be a lot worse.

Dumb-o-meter score: 91. If anyone happens to notice a tearful Welch escorting Immelt out behind a barn somewhere, please notify the proper authorities immediately.