Topic: GM again. News conference at 08:30 Tuesday

[Wolfe]

http://finance.sympatico.msn.ca/investing/news/businessnews/article.aspx?cp-documentid=8639390

GM will suspend its US$1-per-share annual dividend immediately, which will improve liquidity by $800 million through 2009. It's the first time the company has suspended its dividend since 1922.

The company also plans to raise $2 billion to $4 billion through the sale of assets, probably including the Hummer brand.

GM also intends to borrow $2 billion to $3 billion, though Wagoner said it likely won't seek that cash until 2009.

....

The automaker has $24 billion in cash and access to $7 billion in credit, but has been burning through about $1 billion per month.

When a company talks about its liquidity in circumstances like this it's over already except for the shouting. The issue isn't liquidity, it's solvency.

This is a sad last gasp effort of a complacent and incompetent management team that doesn't even have the guts to quit when their epic failure has become impossible to ignore. The company was once too big to fail and is still to big to disappear entirely but that will come as no consolation to all the people who will be hurt by the failure of these beancounters who will walk away with millions regardless.

[tenpenny]

So as it turns its not the asian car makers who will bring down Detroit (although they are delighted to pick up the pieces), but rather a tall weirdo guy named Bin Laden who used to be an associate of the CIA.  That's better than Hollywood could do. 

Bin Laden flukes a 3 pointer against the USA (twin towers).  Americans just happen to elect the first idiot as President who also doubles as a thug and a pathological lier.  Thug and associates then devise a scheme to take over Iraq's oil.  American public living the good life after 8 years of stable government and high growth say sure; "attack who you want, no skin off our *sses".  Thug and associates cut taxes, encourage corruption in the domestic financial markets, and bungle the war.

Result:  The Perfect Storm for Detroit; doubling of oil with all it's obvious consequences for a nation that consumes 40% of world production and ZERO market liquidity (no loans to shaky industries).

So, do you still hate Bush?

[Triple Bob]

http://finance.sympatico.msn.ca/investing/news/businessnews/article.aspx?cp-documentid=8639390

GM will suspend its US$1-per-share annual dividend immediately, which will improve liquidity by $800 million through 2009. It's the first time the company has suspended its dividend since 1922.

The company also plans to raise $2 billion to $4 billion through the sale of assets, probably including the Hummer brand.

GM also intends to borrow $2 billion to $3 billion, though Wagoner said it likely won't seek that cash until 2009.

....

The automaker has $24 billion in cash and access to $7 billion in credit, but has been burning through about $1 billion per month.

When a company talks about its liquidity in circumstances like this it's over already except for the shouting. The issue isn't liquidity, it's solvency.

This is a sad last gasp effort of a complacent and incompetent management team that doesn't even have the guts to quit when their epic failure has become impossible to ignore. The company was once too big to fail and is still to big to disappear entirely but that will come as no consolation to all the people who will be hurt by the failure of these beancounters who will walk away with millions regardless.

Why does everyone always blame the beancounters?  I spend all my time trying to cut the ridiculous wastage from people say in marketing, operations, middle management etc. who seem to like to waste money hand over fist, or to just turn up and do FA all day.  I think you'll find that the fat cats who walk away rich from things like this are the execs who don't have a clue about finance, the ones who will still be dining out as a company is going down the pan...

[safristi]

America uses 25% of world oil...so there I've saved 15% today Articu later... time ta get a hardon fer Obama or McCain.....

[rrocket]

Why does everyone always blame the beancounters? 

By the same token..what do beancounters know about cars? Often, some very nice concept components/details on cars never make it into production because they don't make financial sense to the beancoutners.  Part sharing? Beancounters again......I could go on...but you get my point...

[ghost]

Maybe a good time to buy a Z06. It may be the last of the great muscle car from GM. The makings of a classic.

[DriverJeff]

The worst part is right when GM is starting to really turn the products around and make some world class stuff (trucks, CTS, Vette, Malibu), the financial situation goes from grim to dismal. 

Cut marketing?  Pshaw!  Just thinkhow much money is wasted having cars available in press fleets for so-called automotive journalists?  Or paying those fat-cat salaries of the bean-counters and financial people.  If those financial people were doing their job, the company wouldn't be in financial trouble now would it?   

[Mitlov]

Cut marketing?  Pshaw!  Just thinkhow much money is wasted having cars available in press fleets for so-called automotive journalists?  Or paying those fat-cat salaries of the bean-counters and financial people.  If those financial people were doing their job, the company wouldn't be in financial trouble now would it?   

Maybe they don't mean that, but instead mean that they're going to do less product placement in TV shows (who buys a CTS because the antagonist in Damages drives one?) and less sports sponsorships (March Madness sometimes seemed like one big Chevy/Pontiac ad...not the ads during the games, but symbols on the scoreboards, that sort of stuff).  Those things are really expensive and don't produce much results, and GM does tons of it.

I seriously doubt that they mean they're going to quit giving magazines their cars to test.

[barrie1]

The boys at the top should set some examples by taking much lowere wages to start with if they are really serious about turning this company around. They are still far from Bankrupcy with 31 Billion on hand. They also figure to sell something like slightly over 14 million cars this year or next I believe as well. They are definitely still making profit for sure on every one of them and the quality has defintely beome worldclass as well. The only place they have been losing money is in the US as they have made money just about everywhere else they do business. 

[gta_driver]

When GM talks about cutting back on marketing spend, they're really talking about re-purposing advertising. Currently GM produces advertisng by region, target market and country in North America. When they re-purpose advertising they're producing one ad for all markets. I predict you will see, read and hear a lot of ads normally targeted for the US (and not shown here) on Canadian TV. radio, internet and print.

[Wolfe]

http://finance.sympatico.msn.ca/investing/news/businessnews/article.aspx?cp-documentid=8639390

GM will suspend its US$1-per-share annual dividend immediately, which will improve liquidity by $800 million through 2009. It's the first time the company has suspended its dividend since 1922.

The company also plans to raise $2 billion to $4 billion through the sale of assets, probably including the Hummer brand.

GM also intends to borrow $2 billion to $3 billion, though Wagoner said it likely won't seek that cash until 2009.

....

The automaker has $24 billion in cash and access to $7 billion in credit, but has been burning through about $1 billion per month.

When a company talks about its liquidity in circumstances like this it's over already except for the shouting. The issue isn't liquidity, it's solvency.

This is a sad last gasp effort of a complacent and incompetent management team that doesn't even have the guts to quit when their epic failure has become impossible to ignore. The company was once too big to fail and is still to big to disappear entirely but that will come as no consolation to all the people who will be hurt by the failure of these beancounters who will walk away with millions regardless.

Why does everyone always blame the beancounters?  I spend all my time trying to cut the ridiculous wastage from people say in marketing, operations, middle management etc. who seem to like to waste money hand over fist, or to just turn up and do FA all day.  I think you'll find that the fat cats who walk away rich from things like this are the execs who don't have a clue about finance, the ones who will still be dining out as a company is going down the pan...

The problem with GM is this particular group of beancounters. They pointed the ship at the rocks and then went for a long nap.

Remember the on-again-off-again development of the RWD Zeta platform? GM upper management flip-flopped on that program at least half a dozen times and their justification for killing it then resurrecting it again was cost. The accountants couldn't do the math and decide whether it was worth the investment or not.

[Wolfe]

The boys at the top should set some examples by taking much lowere wages to start with if they are really serious about turning this company around. They are still far from Bankrupcy with 31 Billion on hand. They also figure to sell something like slightly over 14 million cars this year or next I believe as well. They are definitely still making profit for sure on every one of them and the quality has defintely beome worldclass as well. The only place they have been losing money is in the US as they have made money just about everywhere else they do business. 

First, just because they still have cash doesn't mean they can't or won't file for bankruptcy. It's much more complicated than that. They could (and some might argue that they should) file tomorrow while they still have some cash left to try to fix the company.

Second, GM won't sell anywhere near 14 million cars this year. Last year GM sold just over 9 million vehicles globally. Their sales in North America are down 16% so far this year. It would take a divine miracle for GM to even repeat last year's sales total. You're confusing GM sales with the total automotive industry's projected sales in North America for this year which is about 14 million vehicles (that's down from about 16 million last year.)

Third, GM does not even come remotely close to "making profit for sure on every one of them." If GM's current situation weren't so grim I would laugh at that statement.

Fourth, GM's operations outside North America simply cannot support the North American operations for any meaningful amount of time. The problem is one of scale: GMNA is huge and despite the fact that GM's divisions outside North America are generally profitable and growing they are much smaller than GMNA. It would be like flipping over one of the pyramids and expecting the peak to hold up the base.


Sorry Barrie, the facts are against you.

[sailor723]

 While it's far from a sure thing I wouldn't bet on GM being here in 3-5 years unless they REALLY change how things are done at the top. The idea that they are too big to fail is simply wrong. History is littered with examples of companies that ruled their industries at one time and then made crucial errors as times changed.
 In the 60's Chris-Craft outsold the next 4 largest boatbuilders COMBINED!...they owned the market. By the 80's they were gone...( something called fibreglass replaced wood). Someone once told me that the Chris-Craft story was even used as a case study at Harvard Business School
 Through the 50's,60's and early 70's Pan-Am ruled the skies when it came to overseas flights...their major competitor was TWA...anyone flown on either lately?

[DockMan]

The boys at the top should set some examples by taking much lowere wages to start with if they are really serious about turning this company around.

What kind of example is that? You can screw up and do a really bad job as long as your taking a lower wage? Lower wages to the executives is not a solution. I would much rather fire current management and pay more for the right people!

The only place they have been losing money is in the US as they have made money just about everywhere else they do business. 

Having worked in Europe for GM and having inside knowledge of GM-AP, all the other combined GM business do not hold a candle in size to GM-NAO. That's not to say that they shouldn't be looking at what has made them successful outside of NA.

[DockMan]

Contrary to popular rhetoric GM is unfortunately not getting more efficient. They have failed to really take a hard look at every facet of their business to encourage efficiency and innovation. They gains that they are currently making are the result of a better engineering focus (admittedly a very good thing) and the rest is still being done the way it has always been done by beating suppliers into oblivion. The news is rife with large Automotive suppliers that can't do it anymore (bankruptcy) and sooner or later GM's (Ford and Chrysler too) component costs are going to rise. Suppliers won't take it forever and soon there will be substantially less competition. My prediction is that Valeo may be the next to declare and that Delphi will never emerge. Valeo just got finished building a nice big plant to support Chrysler truck production next to a plant that is, as of recently, being shuttered. I wonder if that was in the budget?

[toolatecrew]

The boys at the top should set some examples by taking much lowere wages to start with if they are really serious about turning this company around. They are still far from Bankrupcy with 31 Billion on hand. They also figure to sell something like slightly over 14 million cars this year or next I believe as well. They are definitely still making profit for sure on every one of them and the quality has defintely beome worldclass as well. The only place they have been losing money is in the US as they have made money just about everywhere else they do business. 

The only place they are losing money is in the US? So they make money in Canada?

Didn't think so.

Employees of a money losing GM NA (top managment) should set an example by taking a lower wage in times of porr profitability? Great who's going to follow that example. Now CAW they won't take a wage cut.

Not saying top execs aren't overpaid. But its hypocritical to suggest that some kind of "belt tightenting" example such as a wage cut should be set when the company is doing poorly but not have the example floowed by the rest of the employees. If the comany made a profit on every car they sold they would not be losing money. Its pretty simple math.

[ovr50]

The boys at the top should set some examples by taking much lowere wages to start with if they are really serious about turning this company around. They are still far from Bankrupcy with 31 Billion on hand. They also figure to sell something like slightly over 14 million cars this year or next I believe as well. They are definitely still making profit for sure on every one of them and the quality has defintely beome worldclass as well. The only place they have been losing money is in the US as they have made money just about everywhere else they do business. 

 

I would hate to see GM fail. It would be a huge negative for our NA economy and would impact globally.

That said, Barrie's posts are so full of outright lies and BS, that it begs a response. The following FACTS (a short commodity in Barrie's wishfull-thinking posts) are from a current Bloomberg Business article:

-Total US Auto sales will approximate 14 million in 2008. This is NOT what GM will sell as Barrie has stated. This level is the lowest in 15 years. GMs US market share is expected to be about 21% in 2008, down from 23.5% in 2007. GMs share at 21% would be the LOWEST since 1925....!!!! In the 1960s, GMs market share of US market was in excess of 50%.

- GMs loss in 2007 was $38.7 billion. Yes, billion. GM has not posted a profit corporately since 2004 and this includes ALL operations, not just US operations.

- Should GM suspend it's dividend, it would be the first time since 1922. This is a serious sign of corporate weakness, and should not be dismissed lightly. Companies only suspend dividends when most everything else fails.

- GM stock is currently (past year) the worst performing member of the 30 member Dow Jones Industrial Average.

- Since 2000, GM has cut it's US white collar workforce from 44000 to 32000 with further cuts of up to 20% more coming in the future months. The pain is not only being felt at the blue collar end, as Barrie likes to convey.

These are facts, not some BS from the CAW newsletter which is hardly an unbiased source, and could be totally misleading in many cases.

If one is to comment and agrue about this topic, a more-widely read background would be useful. 

[toolatecrew]

. They also figure to sell something like slightly over 14 million cars this year or next I believe as well.

Belive what you want. Doesn't make it TRUE.

http://www.theautochannel.com/news/2008/01/23/075729.html

Gm sold less than 10 million vehicles in the entire WORLD in 2007 so unless you have some crdible evedience to show GMs sales will rise 40%  what you belive is a complete crock of .

[toolatecrew]

They are definitely still making profit for sure on every one of them and the quality has defintely beome worldclass as well.

One of the new study’s most illuminating figures had nothing to do with productivity. General Motors average revenue per vehicle was only $20,659 while Toyota was $26,514 per vehicle. Compounding matters, Japanese profits per vehicle were significantly higher than GM, with a per car profit of $1,433 at Toyota , $1,250 at Honda , and $1,603 for Nissan. Ford had the highest figure among the Big Three, at $620, while GM lost $2,311 per vehicle in 2004.
http://chrissilvey.com/weblog/?p=112

They are definitley still making a profit on every one of the vehicles they sell? Funny since they lost money on vehicles on average in the past how can they STILL be making a profit on them? I'll sat it again CROCK OF . If you are going to lie at least do it about something where there are not figures to contraadict your lies so easily available.

[Allen]

If one is to comment and agrue about this topic, a more-widely read background would be useful. 

It's hard to read with a beer buzz on down at the union hall, the best they can do is that famous union chant  " heh heh ho ho... "