WHY GM will blow up...
- Thread starter Trend Fader
- Start date
Really? That is completely wrong.
Ever hear of companies using their stock to issue new shares to raise capital.. or buy out other companies in stock deals.
WHen a company has a low market cap vs higher.. their liquidity diminishes.
Anyone else read the interesting article about GM recently in Forbes -- suggested that an outsourced manufacturing model might make sense for GM and other US Auto makers. If you think about it, this makes alot of sense. Similar to Cisco and Flextronics or Coke and Coca Cola Bottling. GM, Ford and Daimler Chrysler should simply be design and marketing companies. Spin off the production, spin off the financing, spin off the distribution (already spun off via dealerships).
Contract manufacturing would allow factories to compete for work and help keep the price down. It would also give greater production flexibility (think "Real Options").
What will put this puppy (GM) down however is the pension, which is essentially just debt. So much for the days of gauranteed benefit plans....those were a bad idea.
Contract manufacturing would allow factories to compete for work and help keep the price down. It would also give greater production flexibility (think "Real Options").
What will put this puppy (GM) down however is the pension, which is essentially just debt. So much for the days of gauranteed benefit plans....those were a bad idea.
DOW components rarely raise cash that way. If they were going to raise cash, they would do it through a convertible or a preferred offering, or probably directly in the bond market - whichever was deemed cheapest.
Most of GM stock is being dragged lower by the convertible preferreds and all the derivatives that are tied to it's credit rating.
Look at the short interest on the company. While it is high for a DOW component (7%), it is no worse than say SBC's short interest.
nitro
No one wants their products either
http://themessthatgreenspanmade.blogspot.com/2005/11/hummer-overfloweth.html
I am not going to discuss socialism issues in this thread, this is about GM and that is a separate discussion.
GM is bleeding market share, and they don't have a solution for this yet. Their debt rating is going to kill them and they will survive as long as they can service the deficits with their cash. When we get the 4th quarter sales report and they announce that they have missed expectations by 35% sit back and watch what happens.
Bob Lutz was the right guy to bring in for product design, but it was already too late to solve the problem. The dealers don't even like selling the new products. Domestic dealers only buy franchises to have the factory service departments and to have access to the financing.
As far as wages not being a concern... Wages drive prices in the long run, not the opposite. When wages come down everything is going to come down with it. A manufacturer does not generate revenues building up an inventory, only when selling inventory. Notice that I didn't mention anything about profits...
Hog you are are right about one thing for sure, it's a big problem and there doesn't appear to be a soft-landing solution to it.
GM is bleeding market share, and they don't have a solution for this yet. Their debt rating is going to kill them and they will survive as long as they can service the deficits with their cash. When we get the 4th quarter sales report and they announce that they have missed expectations by 35% sit back and watch what happens.
Bob Lutz was the right guy to bring in for product design, but it was already too late to solve the problem. The dealers don't even like selling the new products. Domestic dealers only buy franchises to have the factory service departments and to have access to the financing.
As far as wages not being a concern... Wages drive prices in the long run, not the opposite. When wages come down everything is going to come down with it. A manufacturer does not generate revenues building up an inventory, only when selling inventory. Notice that I didn't mention anything about profits...
Hog you are are right about one thing for sure, it's a big problem and there doesn't appear to be a soft-landing solution to it.
Enfinity
Sounds good to me. But let me just say there is no better example of socialism than a two class system. I absolutely love the way some that can not defend their position properly and with true feelings for the other citizens of a society claim the other person is advocating socialism.....The usual cop-out from being intellectually honest with themself and the reality of the argument.... Thanks for the words...
Ps, Toyota has many answers to GMs, Fords problems, they are kicking their butt in everything, especially engineering. Thank you for the memories....
Sounds good to me. But let me just say there is no better example of socialism than a two class system. I absolutely love the way some that can not defend their position properly and with true feelings for the other citizens of a society claim the other person is advocating socialism.....The usual cop-out from being intellectually honest with themself and the reality of the argument.... Thanks for the words...
Ps, Toyota has many answers to GMs, Fords problems, they are kicking their butt in everything, especially engineering. Thank you for the memories....