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Monday, 4 February, 2002, 15:19 GMT
GE engulfed in 'Enron ripple'
GE share price graph
General Electric's chief executive Jeffrey Immelt has responded to criticism about how transparent its business is by saying the company may disclose more financial detail in its next annual report.

His comments, in the Financial Times, came as a new mood of suspicion settles on Wall Street about company profits.

Investors have begun to question conglomerates whose accounting practices are often less than completely transparent.

Shares in the Tyco conglomerate tumbled last week - in what was seen as part of the 'Enron ripple' - because investors found it difficult to scrutinise its accounts.

Nothing to hide

Mr Immelt's comments can be seen as an attempt to reassure these investors, who are questioning all large companies that make profits.

Profits at General Electric, whose interests span aerospace, finance and broadcasting, have moved steadily upward for some time.

Post 11 September, it slipped back into single digit growth for the first time in three years.

Critics have argued that GE is disclosing less about its individual business units than it would have done had it not been a conglomerate, the FT reported.

This was disputed by Mr Immelt who told GE employees he had nothing to hide and said he was irritated by comparisons with Enron and Tyco.

Rating agency scrutiny

GE is also expected to face greater scrutiny from the international credit ratings agencies.

Standard and Poor's has confirmed that it will be looking closely at GE's off-balance sheet financing.

It does, however, stress that GE is not an exception.

"All our investment grade issuers have been requested on off-balance sheet financing, GE is not being singled out," Martin Knoblowitz, Standard and Poor's analyst, told BBC's News Online.

"We have always enquired about off-balance sheet financing," he said.

In the wake of Enron, "we are just following up, being a bit more specific and uniform. There is nothing specific going on at General Electric that we are aware of", he added.

Tyco under fire

Last week, the Tyco conglomerate fell foul of Wall Street suspicions, with its share price plunging to $30, compared with $60 at the beginning of the year.

Its fast growth through acquisition has sparked a series of questions about what is real profit.

Analysts and investors alike found it difficult to discern how much of Tyco's profits are from real growth and how much results from its spending spree in which it has been buying other companies.

The BBC's Martin Webber
on Enron's aggressive accounting practices
See also:

04 Feb 02 | Business
Enron inquiry kicks off
30 Jan 02 | Business
Tyco hit by 'Enron ripple'
11 Oct 01 | Business
General Electric feels the pinch
04 Jul 01 | Business
Q&A: GE's failed merger
27 Nov 00 | Business
New chief for world's biggest firm
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