No easy, cheap fix for GM's problems

No easy, cheap fix for GM's problems http://tinyurl.com/692g8h
Losing a numbing $15.5 billion in one quarter, as General Motors Corp. confirmed Friday, is a sure-fire way to restart the wailing.
Kill Buick and Pontiac.
Euthanize Saab.
Sue the directors.
Dump Rick Wagoner, GM chairman through some of the most transformative (and bleak) times in the company's 100-year history.
Blame the United Auto Workers and the clueless Detroit culture that didn't see $4-a-gallon gas coming (even if Japanese rivals Toyota and Nissan, the airlines and lots of others didn't, either).
However tempting some of these options may be -- and a few actually could happen -- the simple fact is that quick fixes for what ails GM right now aren't easy. Nor are they cheap for a company bleeding cash and trying to conserve every penny.
Soothe Wall Street? Its traders already have shown by their actions -- GM's market cap is a measly $5.79 billion compared with Toyota's $146.7 billion -- they believe the company to be essentially worthless despite its massive assets in the United States and its profitable operations overseas.
Force a company into shuttering brands? Doing so would be the automotive equivalent of the cure being worse than the disease by inviting a wave of litigation and requiring GM to write checks totaling at least a couple billion dollars to dealers protected by myriad state franchise laws.
Validate the critics who've assigned personal culpability to a complex series of business challenges, many of which cannot be controlled from atop the RenCen? Feed a press corps with the attention span of a kindergarten, which will then turn its attention to Bob Nardelli's meltdown at Chrysler LLC?
The point here is not to understate the gravity of GM's predicament because it is very grave. A company that burns cash at roughly the rate of $1 billion a month, reports a 30 percent drop in North American revenue in a single quarter, books a loss in its hot Asian operations and says its overriding objective is to maximize cash flow is a company that is fighting for survival.
I've covered GM for 12 years from three continents, seen its successes and failures, its smart moves (China and Korea), its less smart ones (Fiat) and a legit renaissance in the quality and looks of its cars and trucks. Through it all has been one constant: GM can't muster much of any momentum in its home market, and when things go wrong, they go really wrong.
The truth is that everyone in the business is getting whacked by record oil prices and the consumer's turn away from pickups and SUVs to smaller cars and crossovers. But no one is getting hit harder and destroying more shareholder value than GM, whose stock closed Friday at $10.23, down a staggering 76.3 percent from its 52-week high of $43.20 in October.
Is steering the General clear of federal bankruptcy court the only test of accountability for Wagoner & Co. -- beyond cutting bonuses, that is? GM's directors are scheduled to meet Monday evening and Tuesday, their first since June, in what is likely to be the first in a series of fairly dramatic board meetings over the next 60 to 90 days.
If GM's financials worsen, oil prices spike higher, credit conditions worsen, the automaker's cash hoard slips appreciably south of $20 billion and the company draws heavily on its revolving credit lines, pressure will intensify on the directors to act. It won't matter how broadly they may support Wagoner, President Fritz Henderson and their strategy.
That's business. That's how corporate directors can behave -- arguably must behave -- when sustainably crappy business results quickly merge fiduciary responsibility with personal liability and directors start showing up at board meetings with their lawyers in tow.
The more immediate question: What are you gonna' do about it, GM? It was telling that Henderson opened Friday morning's 90-minute conference call with a reprise of the automaker's two-week-old plan to raise $15 billion through $10 billion in "self-help" cost cutting and $5 billion in asset sales and financing.
"This is a game about rebuilding our revenue base," Henderson said. "It is what it is."
Yes, it is. And it's ugly.
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Civis Romanus Sum

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