Our road map begins with ge, immelt is set to retire this summer the tech stocks are on track to tumble apple under pressure missolo downgrades apple first up, jeff immelt is resigning as the Ceo John Flannery will take over we have talked about immelt and ges trouble just trying to keep pace with the dow. Really since his tenure began. Its the worst performer in the dow since he came in apple hes down 31 some people can always argue at that moment that he came in it was a high water mark. Others have said, listen, he did cut the dividend, but many who cut the dividend i think thats whats happened when you compare him to a honeywell, when you compare him to david cote, even to greg hayes at united technology, difficult to compare very difficult to compare. Meaning immelt does not meet their standard its empirical. Im not saying listen, i know the guys, i know them pretty well, and they were able to reshuffle the portfolios in ways that generated a much better return honeywell did a much better return on the s p. The difficult thing my Charitable Trust owns it, what it is worth. If it were executing perfectly because what happened is that the lets put it this way because its a delicate issue. Okay we do know jeff. I dont want to say you know what, i did say last week i think the stock would pop if there was a change but the cash flow was abysmal the first quarter. I said that before im say it again. That quarter turned a lot of people not only negative but into fearful one of the things that had become part of the narrative was the very strong Deutsche Bank sell where john we have known for years, i knew him when i was a hedge fund manager, talking about the parts, dont buy it for that talking anot being able to make the 2 number, that was said when i interviewed jeff not that long ago. And that the cash flow was a shocker. And the walk back from the 2 number for next year now, im presenting this all as a big pastiche which is basically that jeff said that 2018 would be better than 2017 and there was a belief that the baker hughes deal that would close in june not good put that in context of what the company does say, it was orderly, it would be talked about from 2013. You end up with a kind of a mixed picture of that they were always going to do this. That he wasnt going to stay for 20 years is the timing right for a change i think the time yes. And the stock tells you that. Right hard know whether the board was actually thinking that four years ago as the company says. Yes yes. I know that trian was not thrilled with the walk back and thought there should be a lot bigger cuts. Thats public. Im not doing i have not said anything that is behind the scenes i have behind the scenes on flannery, hes a seemingly jovial man who is not. And, you know, that im getting that from a couple people. Yes. You know, jeff is jovial. And jeff is more of an ambassador, a goodwill, be out there. I dont know if youll ever see flannery. The narrative is that fran vi a tough guy. Did a lot of that flannery is a tough guy. Someone was adamant, he has a plan to break the company up, take that narrative off the table. A plan to be able to scrutinize every division, absolutely he came in health care wasnt that good. It wasnt. It had been a division that i didnt like. They had doubled down and bought i felt inferior assets who knows what they can do with baker hughes. Immelt is on a Facebook LiveInvestor Presentation right now. He said that the board did set this process in motion in 2013, that billion dollar the summer of 17 that succession would happen its caused us to take stock of the times we had to chat with jeff over the last year or two here is immelt no, well listen to this for a moment. Even though i love you all dearly, change is good were standing up baker hughes a lot of the portfolio stuff is behind us and it gives john a platform from which he can lead in the future john is going to talk about himself but i had a chance to see john do five jobs in the last 16 years and gave me the sense of the kind of person who can run the company. First one was in one of the ge equity businesses in the early 2000s. He was in a tough cycle. He spent a long time in my doghouse thats immelt talking about John Flannery. He has spent half of his career outside of the u. S and done a lot of deals and development. Interestingly, the Company Pushing back on this narrative about a breakup. Immediately. We heard from the barclays analyst this morning calling for an at t style breakup. Right you can call for whatever you want one of the things i mentioned recently that there was one of the analysts had come out and said that the dividend is in jeopardy i would say that that there were heat seeking missiles coming my way, that that was even being debated because one of the things was the Deutsche Bank analyst that said theyre setting that up. As soon as you talk about a sum of the parts of a breakup, youre talking about the dividend being in jeopardy so i want to walk that back too. I do think that flannery is bog to look at everything. Did they buy things at the top look, i was there when they made the oil buy. Oil had really run run run run but what i was most afraid, i was so heartened was they didnt come and run at the bottom they doubled down at the bottom. That was a very smart move by jeff at the same time, when you come in at the top youre averaged down like you would with a stock. That is something that takes a little while. Yeah. I thought the baker hughes deal was brilliant, but again, oil is at 46 you need oil to be at 56 to make that thing hum it aint humming the 2 number for next year, i would say that 2 number is no go. I think thats not necessarily out of the cards right a total ge reset would be dynamite, but that is going to make people a little uncomfortable. I think that flannery has to do that because i think he has to make cuts without the cuts you wont get to the 2 number. There is flannery you want to hear this for a minute all right. John flannery, becoming the ceo august 31. You did talk to jeff immelt on mad money about the stock and the swirling bears last year, overall segment earnings roughly flat. Were forecasting 3 to 5 organic growth 100 basis points improvement good backlog and good momentum i think a strong 2017. I think the way were positioned in 2017. Youre going through the bears lets bring in david faber who of course, every time you go on a weeks vacation, news breaks in which we need your insight. Company this morning though insisting this is not a trian dynamic here. Yes, they are and jim of course sharing that narrative as well. As you guys know, and reported already. Saying since 2013 this process began when immelt said that 2017 is when hed announce an exit. At the end of this year, he recon firmed or confirmed that was the case and the board moved into serious thought and process around internal candidates already having identified that was where they wanted to go. As opposed to going externally simon nellie, bornstein the cfo and of course flannery the four they were choosing from. I guess during that meeting when immelt sent the stock down yet again, they were having the interviews right at this time and basically coming around to Flannery Flannery being the choice. But, you know, its interesting to look back at the ten year from mr. Immelt. Hes lost the confidence of the investors. I think he knows that. Apparently did not lose the confidence of his board. And at least the way that they are narrating this for those of us who follow this company closely saying, you know, this was all part of a well thought out process in which mr. Immelt said it was long enough and it probably was 16 years is a long enough time he came in a multiple on the stock price one week before 9 11 it certainly lagged and he did lose the confidence of the investors. It will be interesting to see if flannery is able to gain that confidence back. Jim, im hearing the same thing. Nobody is expecting him to break it up. If they are lauding his ability to turn it around health care, remember the deal. Another asset that people said was bought way too high. Yeah. From the earliest deals that immelt did he has successfully turned health care around the expectation is hes objective about all parts of the company, but no plan to change it lets not forget, immelt is leaving a company thats group around Industrial Assets and 130 or so countries. He did completely and totally change the complexion of ge since he came in. Right its important, david, you know that when jeff was on mad money he still whole company is different than 15 years ago 15 Financial Service earnings, if you took out the last five years we have outperformed the s p 500. If you look over the last five years they have outperformed, once they got out of finance the most important thing, when we look at the comparison of when he came in, remember the hedge fund and drag comments, you wanted hedge fund and drag and then jeff had come on mad money a bunch of times talking about how he was abject that it wasnt the right position. At the same time, i think that theres a lot of people who look at the very difficult compari n comparisons who are in diversified industrials and jeff did have a tough class to go against, wouldnt you agree . Without a doubt you mentioned it of course whether it was cote or hayes or george david a long time it was no doubt they had their share of tough competitors it will be interesting to see what flannery chooses to do. When it comes to trian, my expectations are theyll continue to focus on the promises that were made. Delivering on the cost cutting they said they have wanted to and will be held accountable by trian regardless. Right. It gives them breathing room, but it doesnt mean theyre going away apparently they still have a constructive relationship. Right right. One last point on the portfolio. We did ask about financials and the resurgence of financials, snag ge does something that ge does not participate in this is what he told us in november. I dont regret not being in Financial Services even though bank stocks have had a great week i cheer my friends like jamie on say okay, you have earned it, but it doesnt make me say, holy [ bleep ] why didnt we get out of ge capital. We have a good vision for the company. We like the way the next few years shape up for ge and our job is to execute. Do you second guess the financials exit . Timing of everything was a little off everything i mean the oil buy the Financial Services look, i thought the Financial Services and the sale of nbcuniversal at a low dont forget that. Yeah. But you know what, david, there you can argue yes, first of all, that was a low. But that the people we worked for comcast made this asset into something much more. David, you know that jpmorgan, Credit Suisse and Deutsche Bank had turned against this man. I brought up that repeatedly it was a difficult interview i had with him i want to be candid. I kept bringing up the bears but the bears were in the majority of this and thats a highly unusual situation. It is again, it goes back to fact that listen, immelt was frustrated by the stock price. He continues to be frustrated, im sure when he looks back on the ten year, despite everything he accomplished in terms of completely changing the complexion of this giant company he will continue to be frustrated by the fact that it did not get any respect in the stock market. Didnt stop him though from making from making some big purchases. No. In the last few months. No, not at all. Also to give you what the this is a Credit Suisse conversion at ge is erratic. There are analysts who say buy but the tone of the Analyst Coverage was as negative as i have ever seen from the big from three big firms what was really interesting was that i spoke with a number of ceos in the industry who were shocked that the Free Cash Flow was negative this quarter, including one who told me point blank, how the hell did that happen how did he let that happen i know that there were real issues that david, you know that Free Cash Flow being negative, thats the holy grail of what you condition have happen at a major industrial. No doubt. No doubt interesting to note that bornstein the cfo who would be intimately involved in that as well is going to be moving up to the vice chairman, but did not obviously did not get the top job because he doesnt have the operating experience that he was up against, and flannery with the key operating experience and won that won him the job. Look, its huge news. It might have been in the works from 2013 but in the february interview i would have said that that is quite a surprise now, look, maybe you always have to keep these things close to the vest, but david you know that most recently maybe hes Laurence Olivier i did not feel he was about to go. No. Although, you know, timing would say that it was about that it was time certainly felt like it we talked often about it we saw it, i think, jim. I i mean, the pressure from trian might result in this end but might comeas a result of pressure, perhaps even being applied publicly the most important thing the board does is find the successor. And in this case, it does appear the board was doing the work behind the scenes in keeping it very quiet it does appear that they stayed in his corner. You know, he had the support of the board throughout and it does appear that he at least, if the board stayed behind him and did the work it was supposed to do yeah. Total agreement. I dont want to you know, there are two narratives here. The narrative from the bears that said he had go and then the actual ge narrative. If we do not present the ge narrative i think thats not our part the ge narrative is like, look i it was in the works. David is right brennan, chairman, very tough guy, the board was always in you know, much too close to jeff but to deny their view as some people did when they said when this analyst said theyd cut the dividend is to run the risk of saying, you know what, the guys at ge, theyre not truthful. Im not going to go there. That seems wrong. One last point is, the ongoing chain of multinational manufacturers ceos who have left, right. We talked about the few in a row. Not too long ago claus and some others. I think if you spent a lot of time with trump, it does not seem now, ge was obviously, they wanted they favor pure free trade. I think if youre underperforming in this era, it does in an era by the way that there are activists even going after the largest companies, underperforming is more highlighted, how is that . David, you agree that, more visible if youre not delivering the numbers. Without a doubt listen, the summer is as long as he could have gone without getting significant pressure trian will continue to say were focused much more on the cost an delivering on that, taking out 2 billion over the two year period but it was going to build, jim with all of and particularly as you pointed out so many times and correctly of course, the negative commentary, particularly the likes of coming from deutsche, talking about a dividend cut there was no doubt this was not going end any time soon. Now they get a reset under a new guy. Right davids absolutely right one of the problems that i think people dont understand, when you get the analysts turning against him, i saw it at Procter Gamble there was a rebellion among the analysts and i regarded this as a rebellion. These are people theyre not yahoos, theyre serious people in the business. When you come in and you say, wow, Credit Suisse, holy cow, jpmorgan, i brought this up to jeff and jeff shot them down but the problem is they were so vocal. Its so not a yahoo, very serious analyst. He reiterated sell every week he reiterated sell. You know, listen, its still a situation where analysts feared they will be cut off from the company sometimes for not receiving as much information as they like if they go negative. Thats the extent they were willing to do that. Yeah. They have to i have to point out that barclays came on, they called immelts tenure an unmitigated disaster. Unmitigated disaster and a lot of bad luck. Theres bad luck too if you bet on 00. David, thanks david faber joining us on the phone. When we come back, tech on a track for a rough start after fridays selloff. Apple getting slapped with the downgrade. Well fill you in. Look at the premarket. Resqwkn e re coinues in a moment. The moment turns romantic . Cialis for daily use treats ed and the urinary symptoms of bph. Tell your doctor about your medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain, or adempas® for pulmonary hypertension, as this may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have a sudden decrease or loss of hearing or vision, or an allergic reaction, stop taking cialis and get medical help right away. Ask your doctor about cialis. And get medical help right away. Ready or not, here i come. Ek. anyone can dream. Making it a reality is the hard part. Northrop grumman command and control systems always let you see the complete picture. And were looking for a few dreamers to join us. So, how are things cartheyise . Youre fired [ screaming ] its time to get back on top. Were going back to villainy. So bad so good that im so bad. [ maniacal laugh ] dont try to fight the feeling of somethin thats so organic. [ pop ] despicable me 3. Rated pg. I need the phone thats where i happen to be. To be the one that rings. I need not to be missed phone calls. To not be missed. I need seamless handoff. Canyon software. From reception, to landline, to mobile. I need one number. Not two. Im always moving forward. Because i cant afford to get stuck in the past. Comcast business. Built for business. Take a look at ges performance under immelts tenure the dow is up 121 in the time but ge down 29 . Its the worst dow component since he came into that office. Yeah. Trian is not wanting theyre not willing to talk but i would say that i think this is what they wanted. This is certainly they wanted this fast. I dont think they necessarily i would tell you that when i speak with the you know, periodically i speak with trian i spoke to them last week theyll focus on Procter Gamble i think they got what they wanted. This is what they want. I think they got what they wanted i know i rememb