GM shares at 33-year low on downgrade

GM shares at 33-year low on downgrade http://tinyurl.com/687azb
NEW YORK (CNNMoney.com) -- General Motors stock price fell 10% Thursday, to the lowest level in more than 33 years, as analysts reacted to a
Goldman Sachs downgrade and continued concerns about the automaker's competitiveness.
By early afternoon GM (GM, Fortune 500) shares had fallen $1.26, or 9.8% to $11.55, after hitting an intraday low of $11.21.
The last time GM shares traded at $11.21 was Dec. 30, 1974, according to the Center for Research in Security Prices at the Chicago Graduate School of Business. The price has been adjusted for splits and other price- affecting distributions.
The selloff followed a report issued Thursday by Goldman Sachs downgrading the automaker to "Sell" from "Neutral." Analysts lowered their six-month price target for GM to $11 from $19.
"We expect GM shares to continue to under perform as market fundamentals deteriorate which exacerbates liquidity concerns," the report states. "We think GM's automotive cash flow burn this year and next is likely to lead it to look to raise capital, which we believe could lead to significant shareholder dilution and/or a cut to the company's dividend."
In the first half of the year, General Motors faced strong headwinds in the market because its product line included mostly trucks and sport-utility vehicles, which consumers have increasingly abandoned in the face of high gas prices, said Tom Libby, an analyst with Power Information Network, an automotive research company.
He said the automaker also has faced increasing material costs and high labor costs, representing an additional hurdle when competing with Asian manufacturers on price.
"Their market share is under pressure now, and it will be for the rest of the year," Libby added.
It will take months for GM to restructure its factories to produce the smaller cars that have experienced increased demand, said Libby.
It will also take over a year for GM to realize the cost savings of the recently negotiated contract with the United Auto Workers Union, said David Cole, chairman of the Center for Automotive Research.
"The big question is whether they have enough cash to make it from here to there," Cole said. "It is going to be tough, and it depends on the economy. Once they start to realize their labor savings, we may see profits increase like we have never seen from GM."
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Civis Romanus Sum

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It looks like the end is near. A few years ago it would have been caos on the market. Now it will hardly be a big thing at all. The market share is so low that the rest will not have trouble picking up the slack. I think that we will also see more public transport efforts. The fall ofthe once mighty GM is not going to be felt as much anymore. It will still be interesting to watch what happens and how it affects the areas around the factories but that has already been going on for some time now so nothing really major going on there either.
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In article

I and my family were once big on GM cars. In the late 50s I went to German cars, not liking the poor handling, over powered, heavy NA cars of that time. In the mid 60s I came back to GM's compact cars, but they grew them again, so in the 70s I gave up on GM, their cars were so far from what I wanted. Then I went to Nissan cars. I the 80s I came back to NA cars with several Chrysler cars up to 2001. Nothing Chrysler made in the last several years has been to my liking, it looks like Chrysler turned over their car designs to their truck designers that needed a job. Within a few years I'll have to replace my NA car and if nothing changes significantly it will have to be a foreign car made in NA.
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Why would you choose to spend around 20% more, over a simuraly equipped domestic, to buy a foreign car? Have you comparison priced new small cars lately?
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Selling price perhaps but GM shares have split twice since 1960, when I bought my first GM shares at fourty and an eigth ;)
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Mike hunt wrote:

Soon a GM share will be included with each bottle of your favorite beverage-Mad Dog 20/20 ;-)
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