General Motors

[Azad]

Re: General Motors

I personally think the key is in what you posted ....

It's hard to imagine GM just disappearing altogether.

They have all the elements in place, they are just taking very stupid decisions.

[Crimson Glow]

Re: General Motors

I've been a GM fanatic ever since I started driving. It's really sad to see how far they've fallen.

The biggest reason for GM's current situation is the pitfalls that allowing a union in has created for them. They cannot afford to keep shelling out the size of benefits that their retired employees are receiving, AND give their current employees the type of pay they're demanding, AND expect to turn around in a hard pressed, non-car buying economy. It is going to take very shrewed planning to find a way out of that mess, and unfortunately, a staple of the "American Pie" moving to Mexico may be the inevitable solution since a bunch of high school dropouts refuse to except anything less than obscene pay to perform their mindless, skill-less jobs on the assembly lines.

That all being said, GM has made some good moves recently. They are dropping Hummer, and other GM truck production, the Chevy Malibu has been a hit (very solid car, good gas mileage), bringing over the Holden Commodore as a Pontiac G8 has done very well (in spite of being a RWD V8, they can't keep the GT models in stock), etc. The question boils down to can they keep making these much more intelligent moves, and is it too little, too late? That part is really hard to say. It's hard to imagine GM just disappearing altogether. I'd imagine some rich tycoon would try to snatch them up if it got to that point (much like how Kirk Kirkorian put in a bid for Chrysler).

If you were to invest, it would obviously be a huge gamble, but a very tempting one. I'm tempted myself to throw in some money, and see what happens.

[Azad]

Re: General Motors

"GM may burn $13.9 bln cash by end of 2010-BofA

NEW YORK, June 24 (Reuters) - General Motors (GM.N: Quote, Profile, Research, Stock Buzz) is expected to burn $13.9 billion in cash over the next 2-1/2 years amid a sharp drop in truck sales and may be forced to raise additional capital, Bank of America said in a report.

The struggling No. 1 U.S. automaker may raise about $6 billion to $8 billion through a secured loan and possibly a convertible securities issue, as the collapse in demand for gas-guzzling trucks and sport utility vehicles and restructuring charges will leave GM in a 'precarious" cash position, the bank said in the report released late on Monday.

A spokeswoman for GM could not immediately be reached for comment.

"Given the cash picture, pressure is mounting for GM to raise capital," Bank of America said. "Even though the bank loan market remains very tight, we think GM has enough unencumbered collateral to successfully issue a secured term loan."

The capital raising could help GM's bonds and credit derivatives by reducing liquidity fears, but Bank of America said it is keeping a "neutral" rating on GM because of the automaker's weaker sales outlook."

http://www.reuters.com/article/marketsNews/idINN2432870520080624?rpc=44

[Azad]

Re: General Motors

"GM And Ford: Cramer's "Obit" For Them A Bit Premature!
Posted By:Phil LeBeau

For those who are on a death watch for GM and Ford, the words of CNBC's and Street.com's Jim Cramer are the kind of affirmation they've been looking for.

Yesterday, Cramer's column on Street.com addressed the increasingly dire situation for the two automakers. In one paragraph about the stunning drop in sales, Cramer wrote, "We marvel that this can be happening but the falloff in sales is so pathological that I don't see how these two just don't run out of money. "

While Cramer may know stocks, I think he's crocked on this one. Yes, I agree with him that GM's[GM 12.91 --- UNCH ] dividend is likely to disappear soon as the company moves to save cash. But, on the larger suggestion that GM and Ford [F 5.28 --- UNCH ] will run out of cash, I don't buy it. The two automakers not only have ample cash for the remainder of '08 and the first half of '09, they haven't tapped into all the options available to them.

Would it be good for these guys to become even more leveraged? Not really. But given the choice of borrowing or going bust, I'll take borrowing any day. Yes, Ford is already on the hook for massive loans CEO Alan Mulally lined up to fund his turnaround plan. And Yes, GM has already sold many of its most valuable assets like 51 % of GMAC. That said, these two automakers are not completely out of options.

GM & Ford Face Cash Squeeze Fears
There's also the question of where sales stabilize and how quickly GM and Ford can shift production to more fuel efficient cars and crossover utility vehicles. While both are moving as fast as possible, it will still take several months for the big conversion to take place. Still, I believe these automakers have the production here and abroad to help with them at least limp through the next 6-12 months with the small cars that are selling.

So, if you buy what I'm saying and not Cramer's take, the question is where shares of GM and F bottom out? Is it possible we see Ford drop below $5 and GM skirt closer to $10?

At what point to they become a screaming buy for those betting on a rebound for these automakers? Tough questions for investors and the automakers to answer in the. Midst of the biggest crisis to hit these companies in decades."

http://www.cnbc.com/id/25345853/site/14081545?__source=yahoo%7Cheadline%7Cquote%7Ctext%7C&par=yahoo

[Azad]

Re: General Motors

"Sorry, but this is wishful thinking and a piece of analysis that misses the critical issues.
GM's product portfolio, i.e. "technology"... is 5 years and tens-of-billions in engineering and retooling away from where it needs to be.
Now look at GM's balance sheet and cash-burn. GM does not have 5 years, nor does it have tens-of-billion of investable capital. GM has approximately 7 months before it runs out of excess cash.
Nobody in their right mind is going to give GM sufficient new capital without a massive restructuring plan, and the combined infusion/restructuring are going to nearly wipe out existing stockholders.
Will GM survive? Yes. Will existing shareholders benefit from that turnaround? No."
Lappy

http://seekingalpha.com/article/82115-strong-global-push-means-gm-likely-to-succeed-in-the-long-run?source=yahoo

[Azad]

I was looking in investing into the GM company since stocks are at their lowest since GM's recorded sock history. Are there any posters that have some financial background? what are your inputs?

http://finance.yahoo.com/echarts?s=GM#chart1:symbol=gm;range=my;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

The bad news...
"As investors have sold off GM stock, they have pushed its market capitalization below $8.5 billion. That's only $1 billion more than Cerberus invested in Chrysler last year. If you valued GM on the terms Chrysler got last year, it implies that investors are getting GM's very profitable Asian and Latin American business for free.

With investor Kirk Kerkorian now holding a stake in the company, Ford at least has a committed investor on its side, which is effectively putting a floor under the price of its stock. There is nobody filling that role at GM

This stunning sales decline means that GM is continuing to burn cash at a fearsome rate - perhaps $1 billion a month by some estimates. Rod Lache of Deutsche Bank figures that GM will consume as much as $19 billion in cash over the next two years. Since it began the second quarter with $23.9 billion on hand and needs $10 billion to $15 billion to keep the lights turned on, that leaves a big hole.

To fill it, GM could follow the Chrysler example and start selling off its non-earning assets like land, empty plants, and even underperforming brands like Hummer and Saab. Or it could follow the example of Ford and borrow against its unencumbered assets like trademarks and real estate. Anybody want to make a guess as to how large a mortgage GM could get on its headquarters in downtown Detroit?

Whatever GM does, it is likely to be expensive. Borrowing $10 billion at around 10% interest would cost it $1 billion a year. Analyst Himanshu Patel of JP Morgan lopped $1.20 per share off his estimate for 2010 earnings to account for the interest payments.

It is also likely to leave GM weaker for the long haul. In order to attract financing, analyst Lache figures that GM will need to develop a comprehensive restructuring plan that would include cutting more overhead and further consolidating its brands..."

http://money.cnn.com/2008/06/19/news/companies/taylor_gm.fortune/index.htm?section=money_latest

Sooner than later GM is going to be restructured and will produce fuel efficient cars. Don't you people think there is substantial amount of profit to be made from this company?