evok

You know I agree. If GM can ever get it out then and only then will GMs problems begin to fix themselves. Problem is walking into a GM dealership is a lot like walking into Wal-Mart for Levi jeans. They really are not real Levi jeans, but for an everyday low price...what the heck.

LOL - Maybe the rain will let up so I can step away from this madness.

"No single person will make the thing fly, not Carlos, not Rick, no one." And not the Plan.

Yes - But who is running around and ranting "I have the Plan, that will Return GM to Greatness."

There is a difference - I actually took the time and showed large problems with your plan much like the OC did and why it would not return GM anything. I am not the only one on the various boards that have done just that. You have never shown anyone why we are wrong. The only rebuttal you have is a childish argument that "I am right." That only goes to show the boards that your plan does not have legs to stand on. Apparently GM agrees with me and other on your plan. Hell it had been out in the open for a year now - and NO MANUFACTURER HAS USED IT. That says it all right there.

Than I will claim that those you just listed "without reading their letter" do not know what they are talking about. Just as you are wrong - the feedback you are receiving is also wrong and should not be trusted. PS And most University professors and auto journalist would have trouble getting jobs in their respective fields they cover anyway. Becareful who's opinon you trust.

Well yes and us couple of fellas that have repeatedly shown you to be wrong have years of direct experience with OEMs and other aspects of this business in many capacities. And no, you have never used an argument that has been more persuasive that what the OC has used to show your plan will not Return GM to Greatness. Your 100s of letters of support are more than likely people that do not understand the business. Even Santa Clause gets letters and wish lists!

Comprehend what exactly? You have 20 unsupported opinions as your Plan. You can not rebutt the OC because you do not have a plan supported by fact and data. Your only argument is your opinion. And that lacks credibility when it is not backed by hard evidence. Sorry but that is the way things work in the real world.

You do not elaborate as to why it will work, you only state that it will. You show no material or data in support of your plan. The O.C. and others have shown good arguments why your plan will not work. You have not shown to me or him a good rebuttal argument why he is wrong. In business you must support an agenda with facts as to why a proposal "should" work. That is why you fail at this game.

That is unless GM has some sort of poison bill!

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.

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.

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?

Could you imagine an Oldsmobile engine in a Cadillac?

OK - ?

In concept I love the 3 companies merged together. But in practice I see this as nothing more than a game by Kerkorian. GM's market cap is too weak for a merger of equals at this time. GM has to much growth potential in stock value over the next 24 months for the institutional investors or BOD to sell out. Even an equity stake would not make sense to me looking at it from GMs perspective. Selling 20% of the company for 3 billion with 14 billion awaiting them if the GMAC deal goes through. I will be very surprised if anything happens. GM has everything to loose and nothing to gain in this deal. Renault and Nissan have nothing to offer at this time and everything to gain if there is any truth to their interest beyond a dinner conversation. Even access to Japan is not a reason.

Nissan is larger in the US than Japan. GM US is less than half of their global sales. Renault is mostly Europe.

The Chevrolet Le Maro LOL

Are you refering to the Renault Camaro?

Comment from detnews.com: Fri. 06/30/06 07:03 PM Three_way_partnership Kirk Kerkorian, a major stakeholder in General Motors is now near a bankrupt ( since 2000 and for a lot of years all the cash in Gm is going to the UAW's family, and zero for the stakeholder ).Kirk's money is now the prisoner of wagoner. The concept of GM-Nissan-Renault is a concept of the 70', and we are in 2006... Fernandez-Endeweld, Montréal, Qc Canada

http://detnews.com/apps/pbcs.dll/article?A.../607010367/1148

Here is the issue that has not really been debated on here or in the press. Because, GMs market cap is so low, any partnership between the 3 will make the Worlds Largest auto maker a minority partner. Assuming I am not missing something - this is not good business at this time for GM. They are coming from a position of weakness. An equity swap like the GM-Fiat deal where GM had 20% in Fiat and Fiat had 5% in GM would not be favorable to GM.

GM has to agree to any of this, first. What does GM get out of any equity swap at this time. Especially with the stock value where it is. GM does not need the cash so any cash infusion argument is pointless. The GMAC deal is still pending and is worth 14 billion over three years. Access to markets? What markets? Japan no way. Nissan and Renault have everything to gain and GM nothing. And if there was a true merger? - I highly doubt Nissan and Renault would take on GMs 15 billion in auto debt plus the 100 billion in GMAC debt. Because GM is coming from a weak point because of the Market Cap of the company any deal is all but pointless. GM has problems but not to type of problems that would make them sell out like that. Share holders would be screwed even worse than now.

Good to have you around.

Long time no see!