Lutz speaks on Kerkorian's side

[Guest Josh]

Billionaire Kirk Kerkorian is not the "rapacious raider" he is often portrayed to be, and the Las Vegas investor has taken a 9.5% stake in General Motors Corp. because he believes the company is ready for a turnaround, GM Vice Chairman Bob Lutz said Thursday.


Kerkorian's investment company, Tracinda Corp., said last week it might seek one or more seats on GM's board of directors, but Lutz disputed any assertion that Kerkorian was making demands.


"We are seeing so far, it would be fair to say, none of the behavior that the press ascribed to Kirk Kerkorian," Lutz told reporters after a news conference at GM's proving ground in Milford.


Tracinda, which said last week it might increase its stake in GM but not to more than 9.9%, has maintained that Kerkorian is interested in GM for investment purposes.


A spokeswoman for the 88-year-old, who owns MGM Mirage, the giant gaming company that includes MGM Grand Detroit Casino, said earlier this month that Kerkorian "made a long-term value-driven investment because he has confidence in the company, the American auto industry and the U.S. economy as a whole."


Lutz affirmed that position.


"He smells turnaround," Lutz said. "He has an infallible instinct for getting in at the right time."


Many automotive analysts say Kerkorian will take a more active role and pressure GM to pay out cash to shareholders by raising its dividend or selling some of its assets to raise money.


That's the direction he took with the former Chrysler Corp. In December 1994, at the urging of Kerkorian and in response to its sagging stock price, Chrysler boosted its quarterly dividend 60% and authorized a $1-billion stock buyback, which enriched shareholders.


Four months later, Kerkorian launched his hostile, ultimately unsuccessful, $22.8-billion attempt to take over Chrysler.


Lutz, who at the time was president of Chrysler, Thursday said Kerkorian had intended it as a friendly offer and thought he had the support of chairman Bob Eaton for a management-led leveraged buyout (LBO).


As it turned out, after Eaton told Kerkorian he would take his offer to the board of directors for consideration, the board decided to actively fight the overture.


"The Chrysler takeover attempt, if you look at it, was based purely on a misunderstanding," Lutz said. "He thought he was doing a friendly LBO ... and it turned out to be hostile."


Lutz declined to speculate on whom Kerkorian would appoint to the GM board if he won a seat. Analysts have speculated that Jerome York, a former Chrysler chief financial officer retained by Kerkorian to oversee his GM investment, could be a candidate.


Lutz said he spoke to York in mid-August when he joined automotive analysts at a GM presentation on its financial outlook. The event included a preview of GM's soon-to-be launched cars and trucks.


"He was extremely impressed, told me that the stuff all looked fantastic, and the next day, Kirk Kerkorian bought some more stock," Lutz said.

Source: http://www.freep.com/money/autonews/gm30e_20050930.htm

[Newbiewar]

Many automotive analysts say Kerkorian will take a more active role and pressure GM to pay out cash to shareholders by raising its dividend or selling some of its assets to raise money.

[post="22973"]<{POST_SNAPBACK}>[/post]

This is what I'm afraid of... expecially selling of assets...

but if product and marketing can turn around the company, and he is confident about that... then biggups to him...

[Cortazzo]

Right now GM is seriously undervalued considering the assets it owns. Kirk is smart to move in in a big way here. Each new car out of GM is getting better and better looking, hopefully market share will stabilize and they can adjust volume accordingly.

[network engineer]

Hopefully the entire board will be gone and much of middle management. There is still too much bureaucracy at GM.

[usa1]

Hopefully the entire board will be gone and much of middle management.  There is still too much bureaucracy at GM.

[post="23084"]<{POST_SNAPBACK}>[/post]

I agree. GM needs a good cleaning that targets the useless ranks of people still at the company. Early buyouts is not what is needed. Targeted layoffs of poor contributors is what is needed.

Now if they could only do this to UAW folks.

Mark

[Guest Josh]

OK so Lutz agrees with Kerkorian....could this be the "Lutz" way of getting back at Wagoner for his cheap shots in the BusinessWeek article we read online a few weeks back in which Wagoner basically made a mockery of what Lutz says and how he runs his meetings? Hmmmmm....interesting.

[daves87rs]

OK so Lutz agrees with Kerkorian....could this be the "Lutz" way of getting back at Wagoner for his cheap shots in the BusinessWeek article we read online a few weeks back in which Wagoner basically made a mockery of what Lutz says and how he runs his meetings?

Hmmmmm....interesting.

[post="23139"]<{POST_SNAPBACK}>[/post]

It's possible. But I can still smell shake-up. Whether Kirk does it or not, things are
going to happen...

[SimonDavid]

It's possible. But I can still smell shake-up. Whether Kirk does it or not, things are
going to happen...

[post="23242"]<{POST_SNAPBACK}>[/post]

So can I

Do you think Kerkorian is just going to sit idly by as GM slides into chapter 11? This is the guy who spent years and millions sueing DCX.
If thnigs look like going that way for GM he will demand that GM management demand Delphi style cuts from the union and if they don't he'll sue everyone and/or organise a shareholder revolt. Lutz worked with Jerry York at Chrysler and has been saying nice things about both him and Kerkorian.

[regfootball]

OK so Lutz agrees with Kerkorian....could this be the "Lutz" way of getting back at Wagoner for his cheap shots in the BusinessWeek article we read online a few weeks back in which Wagoner basically made a mockery of what Lutz says and how he runs his meetings?

Hmmmmm....interesting.

[post="23139"]<{POST_SNAPBACK}>[/post]

I get the feeling from all I read that 'THE RICK' just hasn't a clue. Am I wrong?

[mrfunji]

I agree.  GM needs a good cleaning that targets the useless ranks of people still at the company.  Early buyouts is not what is needed.  Targeted layoffs of poor contributors is what is needed. 

Now if they could only do this to UAW folks.

Mark

[post="23105"]<{POST_SNAPBACK}>[/post]

Problem is once you get that high there is no turning back. All the executives never get fired they just get shuffled around at the same level. It's like they hit this plateu because they know they can never come down off it. From what I've noticed (and this is stricly my opinion - American workers are mostly motivated by money, so why not use it as a performance tool? In constrast, Japanese workers are mostly motived by pride - they take pride in doing a good job, and money is a nice bonus. It all stems from culture differences.

I say if GM can promote, then GM can demote.

[CARBIZ]

Or you could take the real cynical view that once an executive knows where all the bodies are buried they have to be kept in the fold....

[Newbiewar]

Problem is once you get that high there is no turning back.  All the executives never get fired they just get shuffled around at the same level.  It's like they hit this plateu because they know they can never come down off it.  From what I've noticed (and this is stricly my opinion - American workers are mostly motivated by money, so why not use it as a performance tool?  In constrast, Japanese workers are mostly motived by pride - they take pride in doing a good job, and money is a nice bonus.  It all stems from culture differences.

I say if GM can promote, then GM can demote.

[post="25334"]<{POST_SNAPBACK}>[/post]

i understand its ur opinion, and i'm not your average joe but... when I work, I pride myself at being the best, no matter what it is... i've just gotta be better... if i'm a cashier, i'll give the promptest most sincre service, and if my efforts arent noticed, i start to slouch... and i'm like wtf am i working so hard if my employeer doesnt care, (i suppose this is your money thing)