On Thu, 5 May 2005 19:10:51 -0400, "James C. Reeves"
I read somewhere that Kerkorian wanting to buy more GM shares may have
been the trigger for the GM junk rating (feared he might try and
separate the mortgage & loan part of the business from the automaking
Are you pro GM or anti GM or just like to bitch about GM? Their bonds
have been rated this low many times before and they will recover as
will Ford. Kerkorian doesn'r matter much, even at 5% ownership.
noyk in Florida
He has ~4% now, and was trying to buy 5% more. Having that many stocks gives
him plenty of power. 5% is ~28,000,000 shares. That's alot of voting power.
And it also would make him the 3rd largest shareholder of GM. Maybe it's
just what GM needs.
Undoubtedly he would. And I'm sure he could too if he really needed to. I
hope that it puts some pressure on Wagoner to put out some better cars (I
know they're equal in terms of reliability, but they leave something to be
desired), get into talks with the UAW, use newer technology, take out ads
showing how much they've gained over the years, etcetera etcetera.
They also need some customer (and competitor's customer) focus groups...find
out what customers (and potential customers) want and what they don't want
(or like) about GM the current vehicles. Then build the cars accordingly.
Who said I'm anti-GM? The US needs GM. It's like your kid that acts
stupid...you give them a good smack. If I didn't think GM was worth the
time, I wouldn't even bother to try to change their piss-poor behavior
towards their customers. They've received some letters from me as well. The
rest of you, get writing those letters of you really care!
James, James, James - for someone who purports not to be "anti-GM", you seem
to revel in their misfortune. This is not the first (and I'm sure not that
last!) time that you have quoted bad-news stories about GM. In fact, in the
years you have posted withing this NG, I do not recall you ever posting a
single good-news story about GM, although there have been many. Perhaps you
are not "anti-GM", but you certainly are much more focused on their failures
than their successes. Find a balance in your outlook "if you really care!".
That's because there IS bad news. I'm not making this stuff up. I believe
that I included with the post referencing this event that it was a sad day
for us GM lovers. It will be even more difficult now for GM to service it's
debt with the junk rating on it's bonds. :-(
I most certaintly have. Buick winning the overal quality award a year or so
back is one that comes to mind. I either started that post or added to it.
What was interesting is that winning the award didn't make any difference in
Buick sales (that I noticed, anyway). That tells me that there is something
other than product quality concerns keeping people away.
On the flip side, there have been few good items to report lately...unless
you count GM's so-called recent initiative to add a GM badge and chrome tail
pipes to boost sales (which doesn't dererve "positive" comment, frankly.
It's damn idiotic and embarrasing!) As GM customers, we should do our part
and take the time to tell them so too!! Write their management and tell
them to get some good focus groups going...get some feedback from people not
buying their cars. Do SOMETHING becides chrome tailpipes, for pete sake!
And perhaps it's GM management that should be the ones focused on the
failures. To do otherwise is a form of denial (management, stockholder or
customer alike). Seems, moast in each category is in denial.
I'll try to look for good news...hard to find lately. ;-) I would love to
have a good reason to feel good about buying the GM stock I once owned
back...AND buy a GM car again. Apparently I have plenty of company at the
moment. I'm just one of the few willing to invest the time to speak up
about it. Once I see movement, I'll invest some other things. But, not
BTW: how is you Vette running?
What can be so bad? Take a look at GMs first quarter dividend.
More buyers by more GM cars than any other, more buyers by more
GM trucks than any other. You make it look like GM is going out
of business because they lost money in the first quarter. With
all the vehicle manufacturer from all over the world focusing on
the US market, where they can make much higher profits than
anywhere else in the world, it is no wonder GM has a smaller
piece of the ever growing market in the US. The US market is
averaging 17,000,000 vehicles. Back when GM owned around 50% of
the market the sales were around 7,000,0000. At its current
share, GM is selling more vehicle than when ti ahd that 50% share
"James C. Reeves" wrote:
Apples and oranges, really.
You'd might want to take a look at the balance sheet and the P&L statements
over the last several quarters....you know, the actual finances of the
company. The numbers there don't work long term, even with the most
optimistic forward-looking financial forecasts. It will take some drastic
changes to get the finances back in balance.
While everything you say may be true, it matters not if all the income
earned by all those sales you speak of is insufficient to service the
interest on their debt (and that is before paying "junk' interest on the new
bonds they will need to issue) and pay current expenses.
Hopefully they will find a way.
By the way...GM can't afford to pay the dividend they are paying. What
they paid out in dividends this quarter was borrowed money. I think the
dividend is basically paying a equilivant of 7% (or more) to stock price.
Even profitable companies can't generally sustain a dividend level that high
for very long. Next quarter if GM has to float a junk bond at 8% to cover
the dividend, they may decide otherwise. It will be interesting to see if
the dividend remains at the level it is at for very much longer.
You're right...there are a lot of IF's. IF none of the IF's happen, GM will
be out of money in a few months, based on the current financial statements
and future income projections. The IF's range from either selling assets
to reducing costs to filing bankruptcy (which some financial analysts
believe GM will have no choice but to do at some point). But they will
likely have to do some or all of the If to pull it out. I guess we'll see
over time. Maybe their hydrogen technology will pull them out soon...GM is
leading everyone in that area!
You must have a crystal ball. How in the world can you pretend to know
what goes on inside of GM's boardroom or it's financial department or
it's manufacturing divisions( unless you happen to sweep the floor
there). They may very well sell some assets as they have done in the
past(EDS, Hughs-Directv, Raytheon, Bank of Detroit, Detroit Diesel,
Electromotive to name a few) but thats what huge corporations do in
lean times. In good times they buy.
Look into your crystal ball and tell me whats next and give me a time
line for these events.
Simple...GM is a public traded company. As such, their financial
information is public information and is required to be by SEC rule. You
can go to EDGAR, your broker or many other sources (even Yahoo) for the
information. Look it up.
Regarding selling assets. I don't know if they will sell assets or
not...only that it's very likely that will need to at the very least. I
believe that is what I stated before based on the financials. Specifically
what will they sell...beats me! ;-)
The Crystal Ball response needed some more analysis time. How about this:
GM spins off the GMAC piece of the business as a separate company.
Naturally the GM stock holders will automatically get stock in that new
company, which would probably be a pretty good deal, actually! That leaves
the car business completely insolvent since it is the GMAC piece of the
business that has been keeping the whole GM afloat for quite a while now.
As a result, the car piece of the business (now separate and unaffiliated
with the GMAC piece) goes into bankruptcy protection (no other option).
What happens then is up to the bankruptcy judge, but there won't be much to
work with without the GMAC piece any longer. The current GM bond holders
will likely be left with useless paper, union contracts will likely be in
dire jeopardy. The government pension insurance may need to pick up some or
all of the GM pension obligations. Stock in the car piece of the business
will be worthless, but the stock in the new spinoff company will probably
offset most or all of that. The car piece of the business re-emerges from
bankruptcy after 2-3 years a mere shell of what it once was, but alive and
renewed. Hmmm...it may not be too bad of a deal to be a stockholder if it
goes down this way.
How was that for a crystal ball analysis? Of course, anything could really
happen, naturally. Just thought of having a little fun with scenarios! Any
other crystal balls out there saying something different?
Boy, I hope your crystal ball is faulty. I, along with 1000's of other
GM retirees will have it tough if your scenario would come even half
Good thing for us GM won't part with GMAC any more than they would part
Between you and I, I hope it's faulty too. But that is what came up as
making the most sense from my perspective when looking at the options (with
limited data, admittedly). The bond holders would get the shaft with this
deal as well, don't forget. Retirees will likely have the government cover
their pensions, so may not be hurt too much. But, financial hardship makes
for strange happenings. It's the old preverbal cut off the limb to save the
life scenario. And remember, the board of directors is working only for the
stockholder. If spinning off GMAC makes sense from a stockholder value
perspective, that could be all that really counts. Time will tell.
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