GM Still Looks Weak, Says Analyst

[Guest buickman]

From Forbes.com

GM Still Looks Weak, Says Analyst

Mary Crane, 06.26.06, 2:51 PM ET

General Motors

Banc of America analyst Ronald A. Tadross said General Motors' tactics to fix its business won't work and advised investors to sell on expected production losses.

"The company's product cycle is at a peak, earnings-per-share quality is weak and the stock is expensive, in our view," Tadross wrote in a report to investors Monday.

"We believe GM management is glossing over the current and future cost of rightsizing the business for the lower share."

GM's suggestion that it might tap into a $4.5 billion secured credit line signals that its $13 billion in cash, as well as assets from its $16 billion in Voluntary Employees Beneficiary Association (VEBA) fund, aren't enough to brace the company against what could be some "serious cash burn" at the end of the year, Tadross said.

Why the cash burn? A possible 8% drop in production in the back half of the year, Tadross forecasted, as GM's production falls in line with the company's negative sales, its product pipeline peaks and as its balance sheet hurts GM's ability to compete.

Once GM's production falls, Tadross said he expects the stock market to have a hard time finding alternative ways for GM to stop the cash burn.

Tadross said GM (nyse: GM - news - people ) was his least favorite stock pick in the auto sector, rated "sell" with a $10 price target.

______________________________________________

Until GM changes their pathetic marketing and does away with 72 hour and Red Tag sales, the distress merchandising from the inept VSSM staff will continue to destroy what is left of America's once mightiest corporation.

Buickman

Edited June 26, 2006 by buickman

[Newbiewar]

anylists say a lot of things...

and your not doing any good by giving them the time of day

read my sig

Edited June 26, 2006 by Newbiewar

[Guest buickman]

anylists say a lot of things...

and your not doing any good by giving them the time of day

read my sig

<{POST_SNAPBACK}>

Perhaps, but I strongly feel he is right on the money. Time will tell. Bankruptcy is all but certain as "Red Ink Rick" has sold off most assets and refuses to even try what is GM's best hope for a Return to Greatness. In fact, it may be too late for any chance of survival.

Buickman

Edited June 26, 2006 by buickman

[CaddyXLR-V]

Perhaps, but I strongly feel he is right on the money. Time will tell. Bankruptcy is all but certain as "Red Ink Rick" has sold off most assets and refuses to even try what is GM's best hope for a Return to Greatness. In fact, it may be too late for any chance of survival.

Buickman

GM wont go bankrupt, unless things go horribly wrong at delphi and there is a massive strike. Most of last years losses were from restructuring costs, and payouts to delphi. I would wait until after the 07 contract is renewed before making statements of where GM is headed. Seems to me like all GM has to do is weather the storm until the new contract.

[redfox]

Rick Wagoner should be fired and bring in someone else to run GM keep bob lutz he does a good job.

[ellives]

Thanks for your opinion. Next time back it up with some reasoning so the rest of us can understand your basis.

Rick Wagoner should be fired and bring in someone else to run GM keep bob lutz he does a good job.

[Guest buickman]

Thanks for your opinion. Next time back it up with some reasoning so the rest of us can understand your basis.

<{POST_SNAPBACK}>

Since becoming head of North American Operations in 1994, Richard Wagoner is responsible for a 35% drop in market share and a loss of over $50 billion in shareholder value since becoming CEO in 2000.

MARKET CAPITALIZATION:

2000 - $66,000,000,000

2001 - $48,000,000,000

2004 - $25,000,000,000

2005 - $15,000,000,000

2006 - $10,000,000,000

--------------------------------------------------------------------------------

Edited June 27, 2006 by buickman

[-Camaro-]

GM wont go bankrupt, unless things go horribly wrong at delphi and there is a massive strike. Most of last years losses were from restructuring costs, and payouts to delphi. I would wait until after the 07 contract is renewed before making statements of where GM is headed. Seems to me like all GM has to do is weather the storm until the new contract.

Why even make a new contract?

[CaddyXLR-V]

Since becoming head of North American Operations in 1994, Richard Wagoner is responsible for a 35% drop in market share and a loss of over $50 billion in shareholder value since becoming CEO in 2000.

MARKET CAPITALIZATION:

2000 - $66,000,000,000

2001 - $48,000,000,000

2004 - $25,000,000,000

2005 - $15,000,000,000

2006 - $10,000,000,000

--------------------------------------------------------------------------------

You mean marketshare just started dropping in 1994? Thats news to me. I thought it started declining in the 70s.

[Chicagoland]

It started back in the "Roger and Me" days. Some look at the 80's blissfully, as if Buick sold 1 million Turbo Regals. Wel, when your a baby or not born yets, sure it was the 'good old days'.

But the first 'fire sale' was 1985, offering a then low 7.7%. [Thinking 1986 would be a fresh start] Yes, the 'good old days of 12% being 'prime'.

So, no, Rick is not totaly responsible.

[Newbiewar]

Perhaps, but I strongly feel he is right on the money. Time will tell. Bankruptcy is all but certain as "Red Ink Rick" has sold off most assets and refuses to even try what is GM's best hope for a Return to Greatness. In fact, it may be too late for any chance of survival.

Buickman

well for starters... most of the asset sales, at least the big ones in the last year were done by york... the finacial guy that companys turn to when they are in the rocks...

i know your refering to fridgidare and delphi and things of that nature

Since becoming head of North American Operations in 1994, Richard Wagoner is responsible for a 35% drop in market share and a loss of over $50 billion in shareholder value since becoming CEO in 2000.

MARKET CAPITALIZATION:

2000 - $66,000,000,000

2001 - $48,000,000,000

2004 - $25,000,000,000

2005 - $15,000,000,000

2006 - $10,000,000,000

--------------------------------------------------------------------------------

Market Capitalization is public perception nothing more...

it can change in a day...

is it right that DCX has 4 times GM's Capitalazation... does that make them any better of a car manufacture?

[evok]

Perhaps, but I strongly feel he is right on the money. Time will tell. Bankruptcy is all but certain as "Red Ink Rick" has sold off most assets and refuses to even try what is GM's best hope for a Return to Greatness. In fact, it may be too late for any chance of survival.

Buickman

You use the words IN FACT, but you have never used a fact in any of your posts.

Spin maybe.

How does this analyst differ from the buy recommendation 2 weeks ago that sent the stock price up.

You are a neophyte as an automotive prophet.

The author of that article used the language, GM is at their product peak. That is bunk.

How can that be when the companies most important NA program has not even been released yet? The 900 PUs.

And yes, GM still has to pay for the buy out of the UAW GM/Delphi staff. So there will be a bad quarter or two coming depending on when they account for the charge against earning to pay for it. It appears this quarter will be it.

http://detnews.com/apps/pbcs.dll/article?A.../606270365/1148

As usual your posts are full of crap and lack of any insight.

[evok]

Since becoming head of North American Operations in 1994, Richard Wagoner is responsible for a 35% drop in market share and a loss of over $50 billion in shareholder value since becoming CEO in 2000.

MARKET CAPITALIZATION:

2000 - $66,000,000,000

2001 - $48,000,000,000

2004 - $25,000,000,000

2005 - $15,000,000,000

2006 - $10,000,000,000

--------------------------------------------------------------------------------

As of yesterday GM was valued at 15+ billion. What was GM trading out in 1992?

Your simpleton analysis ignores a lot the real issues.

Like what really drove the stock price in 2000 and 2001. DCX lost half their value in the same time. F was trading at $30 and today $6 or $7.

Edited June 27, 2006 by evok

[evok]

Yes it is costly but necessary in todays auto business climate. What do you recommend BM, a strike?

http://www.nytimes.com/2006/06/27/automobi...gin&oref=slogin

[91z4me]

per the title of this post, Yes it is a re-run.

[jbartley]

You mean marketshare just started dropping in 1994? Thats news to me. I thought it started declining in the 70s.

Amazing! the way buicktroll speaks you'd think GM was doing just DANDY until Wagoner walked into the CEO office! How silly we are to think the mis-management from the 70's and up is to blame for the crisis today!

[ellives]

You mean marketshare just started dropping in 1994? Thats news to me. I thought it started declining in the 70s.

He never said anything "just started." He was speaking about specific losses in the 2000 to 2006 timeframe.

[ellives]

Sadly he responded to my post, which was directed at this post:

Rick Wagoner should be fired and bring in someone else to run GM keep bob lutz he does a good job.

Since becoming head of North American Operations in 1994, Richard Wagoner is responsible for a 35% drop in market share and a loss of over $50 billion in shareholder value since becoming CEO in 2000.

MARKET CAPITALIZATION:

2000 - $66,000,000,000

2001 - $48,000,000,000

2004 - $25,000,000,000

2005 - $15,000,000,000

2006 - $10,000,000,000

--------------------------------------------------------------------------------

[usa1]

Market Capitalization is public perception nothing more...

Actually it isn't. It's what the market thinks the company is worth. Yes. It can go up and down quickly, but bottom line the company is worth $15B today. Not much money for a company with $200B in sales.

Mark

[The O.C.]

The author of that article used the language, GM is at their product peak.  That is bunk.

How can that be when the companies most important NA program has not even been released yet?  The 900 PUs.

.....not to mention the new CTS and NG Malibu, which are rumored to be damn-near class-leading....

.....or the Opel-based Saturn products.....

.....or the new Lambda SUVs......

Fact is GM is at a product LOW....with the exception of the Corvette, Kappa roadsters, GMT-900 SUVs, and maybe the current CTS still being competitive......

There are great things coming.....even a critic such as myself can see that.....

[The O.C.]

Amazing! the way buicktroll speaks you'd think GM was doing just DANDY until Wagoner walked into the CEO office!    How silly we are to think the mis-management from the 70's and up is to blame for the crisis today!

....."buicktroll?"......

LMFAO.......

[ellives]

You're both, in actuality, saying the same thing with different words. "Market capitalization" is the "public perception" of what the company is worth.

In effect this is really the belief (or lack thereof) the company can generate profits or not. The only real way to change this perception is to actually generate some. Until then, the stock price will continue to stay in the toilet and hamper GM's ability to compete. In fact it would seem as though they'd be a prime target for acquisition at a $15B price target for a company with hard assets that far exceed this number.

Consider that Warren Buffett gave away $37B of his wealth yesterday. Yikes.

If Toyota bought GM, would they bring out the Camaro again or would they call it the "Camara" a la the "Solara?"

Market Capitalization is public perception nothing more...

it can change in a day...

is it right that DCX has 4 times GM's Capitalazation... does that make them any better of a car manufacture?

Actually it isn't.  It's what the market thinks the company is worth.  Yes.  It can go up and down quickly, but bottom line the company is worth $15B today.  Not much money for a company with $200B in sales.

Mark

[FUTURE_OF_GM]

.....not to mention the new CTS and NG Malibu, which are rumored to be damn-near class-leading....

Oh yes, because I forgot... They can NEVER be class leading.

As for Tadross... Well, he's always been a dyed-in-the-wool GM hater. Anybody who follows "the street" can see that.

[The O.C.]

Oh yes, because I forgot... They can NEVER be class leading.

Oh PULLLLLEEEEZZZZZZZZ

You KNOW what I mean.......

[FUTURE_OF_GM]

Oh PULLLLLEEEEZZZZZZZZ

You KNOW what I mean.......

[The O.C.]

I think I'm beginning to really like you........

[Mr.Krinkle]

If Toyota bought GM, would they bring out the Camaro again or would they call it the "Camara" a la the "Solara?"

they could call it the tempura or American crap-mobile and it wouldnt make a difference to some.

no, not everything is rosy at gm or the domestic manufacturers but i or almost anyone could have told you that.

analyst, thats the job i want. id settle for consultant, but analyst seems to be where the real action is. lets engage in a debate with nothing but semantics and facts from anyone anywhere to prove an hypothesis.

[Camino LS6]

I think I'm beginning to really like you........

OMG! The O.C. is starting to understand FOG!

Run!!!

[zhawk]

Anything can be spun around to say whatever an "analyst" wants it to say. Many of them start off researching their facts with their conclusions already drawn and use whatever information supports them and throws out the rest. So much for journalism today.

Hey, has anyone else noted what the first 4 letters in analyst spells out?

[ellives]

Hey, has anyone else noted what the first 4 letters in analyst spells out?

Moron? I was never good at puzzles or spelling.

[LTB51]

Anything can be spun around to say whatever an "analyst" wants it to say. Many of them start off researching their facts with their conclusions already drawn and use whatever information supports them and throws out the rest. So much for journalism today.

Most analysts just pick the mid-point of a companies guidance (+/- a couple %) and then change after the fact to reflect any other guidance the company provides.

It is not too common to see an analyst go off on their own, and when they do they have some reason for it (intuition, bias, bought off, whatever). But I'd say this guy is pretty accurate. I still think GM needs to figure out how to be profitable at ~12% market share, and until they trim away all brands until they only have Chevy and Cadillac, they are only fooling themselves. A few quality cars is better than a lot of average cars.

[ellives]

I agree. The number of brands is confusing and fragmented. They need to get rid of the sentimentality and focus like a laser beam on building the best cars that can be built in the segments they can compete in. The mediocrity game is so played.

Take a page from the story of Jack Welch: Be #1 or #2 in whichever category you choose to be in or get out. They will have a challenge with the number of dealerships they have if they collapse the brands. In our area there is a Pontic-GMC-Cadillac dealer very close to a Chevy-Buick-Hummer dealer. The P-G-C will need to collapse into only Cadillac. This would work because it doesn't work with the currently with the showroom they have. If they focused on Cadillac, they'd do very well. (Their service sucks currently from my perspective. I've been waiting for a replacement NAV unit from them for a month.)

Most analysts just pick the mid-point of a companies guidance (+/- a couple %) and then change after the fact to reflect any other guidance the company provides.

It is not too common to see an analyst go off on their own, and when they do they have some reason for it (intuition, bias, bought off, whatever).  But I'd say this guy is pretty accurate.  I still think GM needs to figure out how to be profitable at ~12% market share, and until they trim away all brands until they only have Chevy and Cadillac, they are only fooling themselves.  A few quality cars is better than a lot of average cars.

[Inchworm]

... In fact, it may be ....

Buickman

Semantic content = null

Unfortunately this is spoken like a stereotypical used car salesman.

Mr D. you are doing yourself no good this way. With every statement like this that I have read in your many posts, your credibility just keeps swirling around the drain. I can't fault your passion, but your logic escapes me.

[w00t_man]

The whole "Red Ink Rick" thing is getting old. Find him a new nickname, at least. Or quit acting like a two year old.

[91z4me]

quit acting like a two year old.

I vote for this one.

Seriously Jim is getting OLD!

[Guest buickman]

The whole "Red Ink Rick" thing is getting old.  Find him a new nickname, at least.  Or quit acting like a two year old.

<{POST_SNAPBACK}>

How about "Rickin Little" 'cause the Blue Sky has fallen?