Whoops?

I am a big Jack Welch fan. With his combination of energy and intellect and straight talk, he woke up a very sleepy giant, GE circa 1980. But before we join the ranks of the likes of Fortune, who breathlessly in 1999 dubbed him Manager of the Century, we might at least glance at the 26 December issue of Barron's. The magazine, in its cover story ("Jack's Magic"), argues that there was more than a small dose of "financial engineering" going on at GE as Welch (like all last-term U.S. Presidents) rushed to polish his legacy-to-be. Specifically, GE under-funded its insurance reserve by about $9.4 billion during Welch's last 5 years. GE stock soared ... and now it's in the doldrums as Jeff Immelt, Jack's successor, absorbs a $9.4 billion profit hit. (During Welch's last 5 years, earnings leapt from $0.72 per share to $1.37 per share, or 90%—some deal for a behemoth. Subtract the insurance under-reserving and the earnings would merely have gone from $0.72 to $0.76 over the same 5 years, according to Barron's.)

Are there no clothed emperors?