Snake Eyes – Kerkorian’s Game of Craps

[evok]

Let me start this off by looking at the value of the three companies that are in play because of the recent game of chance that Kerkorian and Tracinda put in motion last Friday.

GM – 16B USD

Nissan – 50B USD

Renault – 30B USD

Total – 96 B USD

Now let us assume there is a merge of equals, to parody the infamous 1998 Chrysler Corp and Daimler Benz deal. Let us look at the percentages that each respective company will own in a newly formed Global Motors as a result of a merger between GM, Nissan and Renault.

GM Share Holder: 17%

Nissan Share Holder: 52%

Renault Share Holder: 32%

If this deal were to actualize, the world’s largest automaker on volume will control less than 20% of the newly formed mega company at today’s market value. Do I think this will result from the Tracinda letter on Friday? Just by looking at the numbers, and all things being equal, I do not see how it can.

Any such deal, financially does not benefit General Motors or their share holders except one.

Currently Nissan and Renault are at their high in terms of financial performance and stock value. GM on the other hand is at a low and the assumption is GM will go up and the other two will go down. I am using the historical fluctuation of the stock prices to be my guide.

Remember this is a cyclical business, besides the usual drama, all things pretty much are equal over time. Let us say, GM recovers its value in 2 years in the newly formed company and the other two drop. GM historically had a market value at about 32B USD and let us assume Nissan and Renault drop in value because of some brief reasons I mentioned about earlier.

GM – 32B USD

Nissan – 42B USD

Renault – 22B USD

Total – 96 B USD

The stock holder that used to own GM would not benefit at all. The total market value of the new Global Motors is the same as before. Today the combined value of Chrysler Corp and Daimler Benz is less than what it was prior to the 1998 merger of equals.

But realistically, I do not envision a merger that I just outlined. This was just an exercise to evaluate the high level impact of such a deal. In the end if such a deal were to happen it really only values one GM share holder at this time.

So what about an equity tie up between the two companies? This is more probable than say an out right merger but I do not see much value to GM. What does GM really get with an equity tie up with Renault and Nissan?

If GM dilutes the stock, a Renault and Nissan equity infusion for 20% of GM at about current stock prices is worth 3B USD. Is that really significant when GM has the pending GMAC deal worth 14B over three years once the deal is finalized?

We have heard the term synergy, economics of scale, combined purchasing power, combined R&D, etc. Let’s face it GM is the worlds largest auto company on volume, how much more savings can GM take out of their system that they are not already in the process of doing with their own global operations. R&D for a company of GM’s size is relatively small on the balance sheet already, GM purchasing and engineering are already commonizing parts globally, so is there really a benefit of adding Nissan’s and Renault’s volume into the equation. There does come a point where there is a diminishing return on economics of scale. GM's more pressing issues of over-capacity in NA and their legacy cost in NA will not be solved by such action.

So who gains? Of course Nissan and Renault gain. This would open GM up for all sorts of benefits for those two companies. Emerging markets would be a big benefit for both and not to mention GM’s parts bin. Not to mention, Nissan and Renault would gain on GM's stock value and profit sharing as GM recovers. GM is very attractive because of the latter.

But let us get down to who really benefits. Kerkorian! Let us face the facts, GM’s market value is cheap for a company of its size and for reasons that I do not know, Kerkorian most likely wants to bail out of his long term investment in GM. The current stock price of GM is still distressed from where Kerkorian bought into it. If Kerkorian must unload his shares, the only way for him to sell out quickly is to sell to a large investor off the open market. That is where Nissan and Renault come into the picture. This is true in either an outright merger or easier as an equity swap.

Speculation and press drives up the stock price where Kerkorian can sell his GM shares to Nissan and Renault at a slight premium. Kirk benefits because for whatever reason he wants out ASAP.

What does GM get out of it in this case? A new large shareholder to answer to! Now they have to answer to Nissan and Renault. Because GM will only have to dilute the stock by half now, only 1.5B USD as a cash infusion. This assumes, Nissan or Renault will buy Kerkorian current position out right.

So now, tell me what this is all about? This is not about the greater good of GM and we can only hope Rick Wagoner and the majority on the BOD of GM see it this way also.

But than again, if you were a Nissan or Renault sharehold, GM is very attractive! Nissan and Renault did not write the letter! It was Kirk that rolled the die. Was it snake eyes?

Edited July 3, 2006 by evok

[wildcat]

evok: Thank you for taking the time to write this so that all of us can understand what is happening. The figures help to explain the situation and, like you, I hope the GM BOD rejects Kerkorian and York's proposal.

[SimonDavid]

Evok

I usually love your posts. In fact on anything related to product or (non financial) strategy I see you as a total authority, the absolute final word.

But on this one nothing personal but I think you are out of your depth.

Let's take the points one by one :

If this deal were to actualize, the world’s largest automaker on volume will control less than 20% of the newly formed mega company at today’s market value.

Capitalism 101

- success is determined by profit, not volume, and GM isn't making any. There is no great achievement in selling high volume at a loss - if there were then everyone could go into business selling 10$ notes for 9$ and become successful. There are many large organisations that have gone broke because they couldn't make a profit, including the Soviet Union.

- 20% of something is better than 100% of nothing, which is what shareholders could be facing otherwise.

Any such deal, financially does not benefit General Motors or their share holders except one.

This is very confused. In a 3 way merger all shareholders are offered the same price. Therefore they all benefit or lose equally. The only way Mr K could benefit alone is if he sold out privately in a sweetheart deal at above market price. In which case he would surely not have gone public with the information.

(Or if he negotiated a priviledged class of shares for himself like the F*** family)

Currently Nissan and Renault are at their high in terms of financial performance and stock value. GM on the other hand is at a low and the assumption is GM will go up and the other two will go down.

Capitalism 201 : just because it's gone down doesnt mean its going up. Otherwise everyone would have made a fortune buying shares in the airline industry. Even the UAW has publicly admitted that this is way more than just a cyclical fluctuation - it's a structural challenge to the whole basis of the industry.

Remember this is a cyclical business, besides the usual drama, all things pretty much are equal over time.

It is a cyclical business, but the competitors have been consistently gaining profitable market share at GM's expense for the last 30 years and if anything the trend is accelerating.

Let us say, GM recovers its value in 2 years in the newly formed company and the other two drop.

The shareholders will have to weigh that up when deciding whether to accept whatever offer is put on the table. It is after all their company. Personally I think GM's comeback has been 2 years away for the last 20 years.

GM historically had a market value at about 32B USD

Capitalism 301 - the value of a commodity today is whatever the market damn well says it is. Oil historically had a market value of 25$ a barrel until very recently, but go out and try getting takers for it at that price today.

If GM dilutes the stock, a Renault and Nissan equity infusion for 20% of GM at about current stock prices is worth 3B USD. Is that really significant when GM has the pending GMAC deal worth 14B over three years once the deal is finalized?

I agree GM sgould fight a hard bargain - maybe hire some FIAT's negotiators! But 3 billion is alot of money if you don't have it and if GM really can get it from somewhere else they should. But I suspect they can't.

Let’s face it GM is the worlds largest auto company on volume, how much more savings can GM take out of their system that they are not already in the process of doing with their own global operations.

GM isn't the world's largest car company - it's a collection of small regional ones. Lutz has said so himself. It's had decades to become a global entity but it hasn't happened yet. What's relevant is not the savings they can take out, but the savings the actually DO take out.

So who gains? Of course Nissan and Renault gain. This would open GM up for all sorts of benefits for those two companies.

This contradicts what you said earlier. If Nissan / Renault can exploit economies of scale then why isn't GM doing it already? If they didn't think they could run GMmore efficiently then there would be no economic case for a merger.

But let us get down to who really benefits. Kerkorian! Let us face the facts, GM’s market value is cheap for a company of its size and for reasons that I do not know, Kerkorian most likely wants to bail out of his long term investment in GM

I don't think a guy becomes a billionaire by deliberately buying high and selling cheap - if he thought GM was cheap he'd be buying more. As above, the size is irrelevant - it's profit that counts.

On pure financial analysis the market has valued GM's car business at zero for several years. GM's market cap has always been roughly the value of GMAC less any unfunded pension liabilities. If GMAC is gone then the rest of the business is basically worth zero unless they can do a Delphi and move onto a whole lower cost base. And given that the only way to get to that lower cost base may be via chapter 11, it's not really worth a shareholder gambling on.

Speculation and press drives up the stock price where Kerkorian can sell his GM shares to Nissan and Renault at a slight premium.

You are suggesting that Mr K is misleading the market - which is illegal. There are stockmarket rules covering this. Tracinda has detailed what it is doing in a public filing with the SEC. This is not lighthearted discussion. And Nissan have passed a board resolution authorising negotiations.

What does GM get out of it in this case? A new large shareholder to answer to! Now they have to answer to Nissan and Renault.

Uh, let me see, survival? Avoiding a collapse of the USA's largest pension fund? Salvaging at least some jobs from the mess?

A large shareholder is exactly what GM has always needed. The problem is that noone effectively owned it - it was a quasi public sector beauracracy run for the benefit mainly of the UAW and the dealers.

The tragedy to me is that the government didn't let this happen 25 years ago to Chrysler - the UAW would have been broken and the shock would have galvanised Ford and GM. Instead the tough decisions were postponed.

[Mr.Krinkle]

point--counterpoint...

i guess the underlying confusion is a result of the method. why go so public with such a suggestion.

either there is no intention to sell and just drive prices and interest, not the money kind, up up and away or..

there is every intention to sell and just wants to let gm have a say in how it gets done.

if the deal were to happen as you say and gm then declined there would be other open avenues to accomplish this deal.

but why the shadiness? being the pessimist/cynic id have to say someone is up to something. for mo money, for to sell and hit the road never to be heard from again. one last hoorah.

maybe the means or method can be debated but the motive seems rather clear.

[evok]

I will fill in the blanks later but I see a difference in opinion:

I am long and bullish on GM as an investment and SimonDavid is not. I do not disagree on a few points and I will cover more later.

I just do not like the deal and I will cover why.

[Member55]

GM is making positive turnaround moves and if you want to make money you have to jump in before the stock market realizes what's going on. How come nobody was suggesting an alliance with GM a year ago? GM stock was $90 while being under much more unfavorable labor situation when compared to today and even more importantly in a year or so.

Edited July 4, 2006 by Member55

[Shantanu]

I'm not sure how useful your analysis is, because as I understand it, GM has no power over this deal. They are not asking GM to issue more stock. What they are trying to do is acquire 20% of outstanding GM shares on the market, perhaps by convicing enough big holders of GM to sell it to them at a considerable premium. In that case, GM has no power to tell their stockholders that they cannot sell.

[Member55]

I'm not sure how useful your analysis is, because as I understand it, GM has no power over this deal.  They are not asking GM to issue more stock.  What they are trying to do is acquire 20% of outstanding GM shares on the market, perhaps by convicing enough big holders of GM to sell it to them at a considerable premium.  In that case, GM has no power to tell their stockholders that they cannot sell.

IIRC they did say they would like to have GM board approval of any deal, I don't think they want to get into hostile situation. As you said, they don't need anybodies approval to buy GM stock on the open market but I guess if the alliance is to work it's better if everybody is cooperating. BTW, my shares are not for sale, I think I can make much more long term if GM stays completely independent.

Edited July 4, 2006 by Member55

[drew770]

GM might not be able to tell shareholders what to do but they can recommend and alot of GM's shareholders are institutions and not individuals.

CALPERS is a huge investor and Wagoner will need to express that GM is heading down the right path now without the help of Euro/Japanese influence.

Wagoner will also have to let the institutional investor know that this deal will only disrupt the current turnaround!

[evok]

My thesis is this. GM is not going to go bankrupt anytime soon. That is, unless it is a strategic Chapter 11 Filing to dissolve their legacy obligation.

GM is sitting on almost 15+ billion in cash, assets in VEBA and a potential of another 14 billion from GMAC. For the time being the pension fun is fully funded.

GM Automotive operations have 15 billion in debt that is not scheduled to mature until mid to late next decade. I do not have the 10k in front of me to see the schedule of debt.

Assuming a status quo at GM, they have breathing room.

I did subtract out the GMAC 100+billion of debt. Though that does go against GM Corps, bottom line and factored into the stock price, that debt should be freed up when the GMAC deal is finalized and in theory GM no longer has direct financial control over GMAC. I use theory because it depends on how Wall St. reacts.

I agree, GM has made almost zero money in the past 15 years if their financial bottom line is tallied in that time. Especially given the 10 billion losses in 2005 and the 20+billion in the early 1990s.

GM has become a welfare state that sells product to support their legacy cost.

We do not disagree that GM does appear to be very inept in their US operations. They are held captive by their unions and their dealers.

But that does not change the fact that GM still sells 8+ million cars globally and 4.5 million of them in the United States. In that same time GM has invested very aggressively into China, Eastern Europe, Korea and South America, generating close to 200 billion dollars in revenue. That is almost 1/3 greater than a combined Nissan and Renault.

Though, in recent times, GM has not generated profit from that revenue, if GM can fix their cost structure in NA once and for all, the NA operations can maintain a profitable operation. That also assumes that GM will begin to offer product the public wants.

GM with the recent costly deals with the UAW have maintained labor peace and reduced their vehicles/worker to be close with Toyota’s efficiency in NA. The recent buyouts will not come cheap and I suspect that will be reflected in the balance sheets in the next quarter. GM has also restructured their retiree’s health care obligations. All of this to address their legacy costs in NA.

The 2008 UAW contract should be the last step in fixing their labor cost.

But this has all taken time and requires patience that Wall St. has not had with GM.

From an operational standpoint, GM is a shadow of the company it was a few years ago. Many organizations from design, engineering, purchasing and marketing are now on the cusp of becoming one global organization.

Personally I have not been happy with the speed of these changes, but in this business it has taken 20 years to completely revamp the whole organization. In the process it almost destroyed GM’s European operations. It is only 6 years later that GME has begun to turn around, leaving NA the last child to fix.

Another assumption that I make it the most important part of this turn around and that is product and having the right product mix for the current environment.

Now how does a R-N equity play into this.

What is known is that GM filed with the SEC two letters from Tracinda. One Tracinda letter to Renault and another to GM, where Tracinda stated that the respective companies should investigate an alliance as was GM’s obligation.

Subsequently:

“DETROIT - General Motors Corp. (NYSE: GM) has received no offer or proposal from Renault/Nissan with respect to its participating in the Renault/Nissan Alliance, as suggested in the 13-D Filing made today by the Tracinda Corporation. The Tracinda request will be taken under advisement by the GM Board of Directors. At this time, we have no further comment.”

and

“"Exploratory discussions with General Motors, concerning an alliance, could start if General Motors Corporation makes the proposal," Renault said in a statement.”

Now what does GM get out of an equity alliance with R-N, particularly, when GM is coming from a weak market capitalization and when GM may be a year away from turning that around? Especially since this whole discussion has started because of Kerkorian and not R-N.

· 1.5 – 3 Billion dollars for R-N to purchase 20%, depending on if Kerkorian does or does not sell out his shares. Given GM’s current cash on hand, it does not appear they need the money and risk control of the company.

· An R-N alliance does not rectify GM’s legacy costs.

· An R-N alliance does not rectify GM’s US labor issues.

· An R-N alliance may not aid GM cutting costs because of platform sharing. GM plants would have to be reconfigured, as would component sets that are design specific. Platform sharing would be a long term 5 – 10 year proposal.

· An R-N alliance would not help cut GMs NA auto capacity because of contract issues with the UAW.

· An R-N alliance would not solve GM’s problems with their dealers.

· An R-N alliance will not give GM access to new markets.

· An R-N alliance will not give GM a leg up on powertrains. GM’s powertrains are dictated because of their structural cost, which this deal if actualized will not solve.

· An R-N alliance will not improve GM manufacturing operations.

· An R-N alliance will not enable GM to bring product to market faster.

In summary an R-N alliance will do very little for GM as GM proceeds with their own global alignment. This is a corporate distraction and pure stock price manipulation by Kerkorian. GM is already a global enterprise where a tie-up with R-N will not produce the synergies that are being promoted. Kerkorian already has tried something similar at Chrysler.

GM has more to loose than to gain. Currently R-N are already showing signs of slowing. Ghosen will be busy with his own global alliance and would not have the time to learn the problems that GM has to address. GM also does not have the time to wait for Ghosen.

GMs problems are of their own making that good product can address. That is the simple answer.

A long term shareholder would be foolish to endorse a shell out to R-N for the reasons I have stated above.

Kerkorian is manipulating the situation as vulture for his own reasons. He did it at Chrsyler and now he is doing here.

GM just needs to deliver the product.

Edited July 5, 2006 by evok

[motownr]

As part of an organization that has sold both GM and Nissan products for decades, I'd say give this idea a few months to simmer: my guess is that you'll see that this is as much a cry for help from N-R as it is a ploy by Tracinda to create change at GM.

Ghosn is, IMO, totally overrated as an executive: Nissan NA is in shambles, with massive HR problems, nervous dealers, and no clear path to either joining Honda and Toyota at the top of the import market, or fighting off Hyundai at the lower end.

OTOH, GM is clearly making progress; it's been slow, and certainly there's a ton still to do, but the trend is clear.

Ghosn wouldn't last long dealing with either the UAW or the dealers; he's all stick, no carrot.

Anyone remember a guy named Ron Zarella? How about Jac Nasser? Ghosn is a cheaper, coarser, copy.

Great discussion!

[haypops]

Capitalism 201 : just because it's gone down doesnt mean its going up. Otherwise everyone would have made a fortune buying shares in the airline industry.

Please consider the authoritative Motley Fool.

www.fool.com

They have an investing stratergy that they sometimes discuss called the "dogs of the Dow", IIRC. Historically investing in the 5 lowest perfroming stocks of the Dow Jones index has returned handsome income.

[evok]

http://detnews.com/apps/pbcs.dll/article?A...302/1148/AUTO01

Wednesday, July 05, 2006

Daniel Howes

We want to know, Kerkorian, what's your vision for GM?

[evok]

Source: http://www.forbes.com/columnists/columnist...lint.htmlGlobal Motors?

Jerry Flint 06.30.06, 5:00 PM ET

This link should work.

Edited July 5, 2006 by evok

[evok]

Suzuki CEO offers GM's Wagoner vote of confidence

05 July 2006

http://www.stuff.co.nz

[haypops]

link for forbes article

The other link didn't work for me. Is this the same article you linked to?

[evok]

I fixed the Jerry Flint link:

More to think about.

http://www.autoextremist.com/page2.shtml#Rant

by Peter M. DeLorenzo

Kerkorian + York + Ghosn = Disaster for General Motors.

[Newbiewar]

now i'm thinking that history repeats itself...

now... when Kirk was dealing with Chrysler... he did what...

he tried to purchase the company outright... or did he?

and somehow it ended up merging with dymler-benz... now did he benifit from that merger?

does kirk own any portion of Nissan or Renault?

so... will this Nissan Renault deal, fall apart, and somehow another deal just magically appears that seems 10x better then with carlos goshen?

perhaps we need to pay closer attention to what happened with chrysler...

and what roll did Lutz play in the transaction before?

because the Merger with Chrysler led Lutz into a 10 million dollar lump sum if i remember correctly...

what exactly is going on... that the media isnt playing up?

[Drew Dowdell]

Didn't Kirk try to sue DCX over the merger?

[evok]

I am going strictly from memory of the events leading up to and just after the DCX venture. There was a good book written about the Chrysler-MB merger written in 2000. I am not double checking my dates.

“now i'm thinking that history repeats itself...

now... when Kirk was dealing with Chrysler... he did what...”

KK bought about 10-15% of Chrysler Corp in the early 1990s. At the time Chrysler was trading at about $7 a share. Chrysler Corp around 1993 just after Eaton was full CEO and Chairman was sitting on 10 billion in cash. KK wanted that money. After the KK/Iaccoca coupe attempt and York placed on the BOD, Chrysler increased their stock dividend to appease KK.

“he tried to purchase the company outright... or did he?”

IIRC KK and Iaccoca wanted to structure the takeover where they used Chrysler 10 billion cash hoard as payment for the company. The takeover failed.

“and somehow it ended up merging with dymler-benz... now did he benifit from that merger?”

Just after the merger DCX was trading at over 100 a share. KK sold a big portion of his stake at that time. When MB bought out Chrysler, MB paid a premium for the share. I believe C was trading at 28 a share and MB bought them out at a 20% premium. So I think the sale price was in the low 30s. KKs position doubled in value right after the merger.

"does kirk own any portion of Nissan or Renault?"

Not that I am aware of.

“and what roll did Lutz play in the transaction before?”

Lutz was quiet during the whole thing from what was reported. If what I read was true, he named the company DaimlerChrysler.

“because the Merger with Chrysler led Lutz into a 10 million dollar lump sum if i remember correctly...”

Eaton I think walked away with 30 million or there abouts. All the execs did. There were all sorts of caveats though. But remember, Chrysler at the time had a relatively strong stock price and a lot of the execs at the time were sitting on 7 dollar stock.

Edited July 5, 2006 by evok

[Newbiewar]

I am going strictly from memory of the events leading up to and just after the DCX venture. There was a good book written about the Chrysler-MB merger written in 2000. I am not double checking my dates.

“now i'm thinking that history repeats itself...

now... when Kirk was dealing with Chrysler... he did what...”

KK bought about 10-15% of Chrysler Corp in the early 1990s. At the time Chrysler was trading at about $7 a share. Chrysler Corp around 1993 just after Eaton was full CEO and Chairman was sitting on 10 billion in cash. KK wanted that money. After the KK/Iaccoca coupe attempt and York placed on the BOD, Chrysler increased their stock dividend to appease KK.

“he tried to purchase the company outright... or did he?”

IIRC KK and Iaccoca wanted to structure the takeover where they used Chrysler 10 billion cash hoard as payment for the company. The takeover failed.

“and somehow it ended up merging with dymler-benz... now did he benifit from that merger?”

Just after the merger DCX was trading at over 100 a share. KK sold a big portion of his stake at that time. When MB bought out Chrysler, MB paid a premium for the share. I believe C was trading at 28 a share and MB bought them out at a 20% premium. So I think the sale price was in the low 30s. KKs position doubled in value right after the merger.

"does kirk own any portion of Nissan or Renault?"

Not that I am aware of.

“and what roll did Lutz play in the transaction before?”

Lutz was quiet during the whole thing from what was reported. If what I read was true, he named the company DaimlerChrysler.

“because the Merger with Chrysler led Lutz into a 10 million dollar lump sum if i remember correctly...”

Eaton I think walked away with 30 million or there abouts. All the execs did. There were all sorts of caveats though. But remember, Chrysler at the time had a relatively strong stock price and a lot of the execs at the time were sitting on 7 dollar stock.

are there any other questions that should be thought about when considering Kirks intentions?

and how can a lot of this relate to todays debackle with GM...? i'm sure Kirk has learned a thing or two in the last 10 years to make sure his investment grows more so then it did before...

[Ghost Dog]

So Evok do you think Kerkorian will get it pushed through?

[Newbiewar]

So Evok do you think Kerkorian will get it pushed through?

i hope not... i think there are enough people will see carlos as the wrong person to goto with GM's situaltion

[evok]

So Evok do you think Kerkorian will get it pushed through?

I have no idea what this will lead to.

I was speculating humoursly with someone earlier today that in the end, GM and R-N will end of setting up a 50-50 joint Powertrain Joint Venture and call it done.

I just have trouble believing Wagoner and his management will take this without a fight.

Edited July 5, 2006 by evok

[evok]

are there any other questions that should be thought about when considering Kirks intentions?

and how can a lot of this relate to todays debackle with GM...? i'm sure Kirk has learned a thing or two in the last 10 years to make sure his investment grows more so then it did before...

$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

IMO I do not think KK ever expect GM to head south in value and touch the teens. I believe KK thought he bought the company cheap in the low 30/share and that he expected the company to head back to the mid to high 40/share in the next 12 months.

Katrina, DPH and a whole scale restructuring of the company were not on his schedule.

5 year

http://quotes.nasdaq.com/quote.dll?page=ch...=GM&selected=GM

10 Year

http://quotes.nasdaq.com/quote.dll?page=ch...=GM&selected=GM

Edited July 5, 2006 by evok

[Newbiewar]

$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

IMO I do not think KK ever expect GM to head south in value and touch the teens.  I believe KK thought he bought the company cheap in the low 30/share and that he expected the company to head back to the mid to high 40/share in the next 12 months.

Katrina, DPH and a whole scale restructuring of the company were not on his schedule.

5 year

http://quotes.nasdaq.com/quote.dll?page=ch...=GM&selected=GM

10 Year

http://quotes.nasdaq.com/quote.dll?page=ch...=GM&selected=GM

so hes desperate?

[BigPontiac]

Another related article/opinion

Can GM learn something from Apple?

JOHN DVORAK'S SECOND OPINION

Can GM learn something from Apple?

Commentary: Strong design might yet save automaker

[MyerShift]

I have confidence that GM is able to turn itself around on its own without outside help, aside from maybe , say, a federal loan.

Chrysler did just that in the 1980's, and they repaid the loan sever years EARLY.

Kerkorian's deal is just a way to regain money he may have lost when GM stocks dipped.

[wildcat]

I just read the other day someone knowledgeable saying GM has the design talent, it's just that beancounters and bureaucrats were given a lot of say until Lutz's arrival and all this wholesale restructuring.

BigPontiac: Thank you for sharing Dvorak's piece. Design is absolutely critical. But I think Wagoner and Lutz have been and can continue to cut through the "fiefdoms" and let GM's designers show us what they can do - the Buick Enclave will be a good example!

Edited July 5, 2006 by wildcat

[BigPontiac]

I just read the other day someone knowledgeable saying GM has the design talent, it's just that beancounters and bureaucrats were given a lot of say until Lutz's arrival and all this wholesale restructuring. 

BigPontiac: Thank you for sharing Dvorak's piece.  Design is absolutely critical.  But I think Wagoner and Lutz have been and can continue to cut through the "fiefdoms" and let GM's designers show us what they can do - the Buick Enclave will be a good example!

I agreed with the premise of the article that good design is the solution to a recovery (once they solve labor issues, Delphi, etc.). I didn't agree with the part that Team Wagner needs Ghosn's help. I've owned 4 Nissans...and the newer ones are definitely cheaper than they used to be...and my 6 friends with 2003 and earlier Maximas all HATE the current model!

Rick Wagner has a difficult job...I think Kirk is looking for GM to pay him a premium on his investment to go away. And as someone who worked at IBM during the York-era, I don't have much good to say about him. When he started his cost cutting, the "bright-sizing" effect kicked in -- those who can leave, do. Cream doesn't always rise to the top -- sometimes it gets skimmed off by your competitors!

[76ChevyTrucker]

Thanks for giving me a head's up on this one. I personally don't want GM to team up with anyone, I think they're perfectly capable of doing very well on their own.