GM stock to go to zero!

[kevman]

GM Plunges as Deutsche Says It May Become Worthless (Update4)

Nov. 10 (Bloomberg) -- General Motors Corp. plummeted to its lowest level in 59 years after a Deutsche Bank AG analyst downgraded the shares, saying they may be worthless in a year.

``Even if GM succeeds in averting a bankruptcy, we believe that the company's future path is likely to be bankruptcy- like,'' Deutsche Bank's Rod Lache wrote today in a note. The New York analyst recommended selling the shares and cut his 12-month price target to zero. He previously advised holding the stock.

The decline shows mounting pessimism that a turnaround will succeed at the largest U.S. automaker amid the credit crisis and the worst sales market in at least 15 years. GM is petitioning the U.S. government for aid after saying last week it may not have enough cash to operate this year. A bankruptcy typically wipes out the value of a company's shares.

Barclays Capital and Buckingham Research Group cut their price targets for GM to $1.

GM, based in Detroit, fell $1, or 23 percent, to $3.36 at 4:15 p.m. in New York Stock Exchange composite trading, in its lowest close since June 17, 1949, according to Global Financial Data in Los Angeles. The shares have lost 86 percent of their value this year. Ford Motor Co. dropped 9 cents to $1.93.

``We believe any government assistance would likely significantly dilute GM's equity,'' said Chicago-based Barclays analyst Brian Johnson, who reduced GM to ``underweight'' from ``equal weight'' and lowered his price target from $4.

Government Support

GM, Ford and Chrysler LLC, owned by Cerberus Capital Management LP, appeared over the weekend to be moving closer to gaining that federal aid. U.S. House Speaker Nancy Pelosi of California and Senate Majority Leader Harry Reid of Nevada wrote Treasury Secretary Henry Paulson to urge that bank-bailout funds be opened up for loans to automakers.

Rahm Emanuel, chief of staff to President-elect Barack Obama, said the U.S. auto industry ``essential'' to the economy.

While Emanuel stopped short of endorsing such a plan, the White House today signaled its opposition, saying aid to the industry wasn't discussed during the debate on the banking bailout. Congress may take up automaker assistance when it returns next week.

``GM's only salvation is a capital injection from the government,'' said Buckingham analyst Joseph Amaturo in a note today, cutting the automaker's share-price target to $1 from $3. ``The company liquidity position is dwindling rapidly given the automotive cash burn,'' said the New York-based analyst, who rates GM shares ``underperform.

`Stress Prices'

GM's 8.375 percent bond due in July 2033 rose 1.75 cents to 25.75 cents on the dollar, or less than half its price of two months ago, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The bond yielded 32.5 percent.

``Shareholders are likely to be wiped out, effectively,'' Bruce Zirinsky, co-chairman of the financial restructuring department of Cadwalader, Wickersham & Taft LLP, said in a phone interview from New York. ``If you look at the GM debt, it's trading at a substantial discount, at stress prices.''

GM asked dealers to petition the U.S. Congress for funds for the industry, saying the credit crisis is preventing automakers and suppliers from getting needed loans.

The automaker offered a proposed letter on its Web site suggesting dealers say that ``helping our industry in the short term will have a much lower cost than addressing the effects of a failed industry in the midst of an economic turnaround.''

Liquidity

GM, in a regulatory filing today, said the global economic and credit turmoil requires the company to find ``additional near-term liquidity support.''

``Based on our estimated cash requirements through December 31, 2009, we do not expect our operations to generate sufficient cash flow to fund our obligations as they come due, and we do not currently have other traditional sources of liquidity available to fund these obligations,'' GM said.

Capital markets have essentially been closed to the company and it's unlikely to secure borrowing in the near-term, GM said.

``Our ability to continue as a going concern is substantially dependent on the successful execution'' of plans to improve liquidity by $20 billion by the end of 2009, GM said in the filing.

GM hasn't posted an annual profit since 2004 and sales in the U.S., its largest market, have fallen every year since 1999.

Implied volatility for GM options exceeded 300, a level Lehman Brothers Holdings Inc. topped before its bankruptcy filing and American International Group Inc. reached prior to the U.S. government's bailout. Implied volatility, the gauge of option prices for GM at-the-money contracts expiring in 30 days, climbed 43 percent to 325.64 at 4 p.m. in New York, according to data compiled by Bloomberg.

GM's November $3 puts were its most-active contracts, with 18,042 changing hands. They more than doubled to 70 cents. December $2.50 puts jumped 65 percent to 91 cents. The contracts give the right to sell GM shares for a certain amount by a given date.

 

[GTaudiophile]

Too bad. According to last night's TOP GEAR episode they're finally starting to make good cars.

Too little too late.

 

[foghorn67]

Originally posted by: kevman
GM Plunges as Deutsche Says It May Become Worthless (Update4)

Nov. 10 (Bloomberg) -- General Motors Corp. plummeted to its lowest level in 59 years after a Deutsche Bank AG analyst downgraded the shares, saying they may be worthless in a year.

``Even if GM succeeds in averting a bankruptcy, we believe that the company's future path is likely to be bankruptcy- like,'' Deutsche Bank's Rod Lache wrote today in a note. The New York analyst recommended selling the shares and cut his 12-month price target to zero. He previously advised holding the stock.

The decline shows mounting pessimism that a turnaround will succeed at the largest U.S. automaker amid the credit crisis and the worst sales market in at least 15 years. GM is petitioning the U.S. government for aid after saying last week it may not have enough cash to operate this year. A bankruptcy typically wipes out the value of a company's shares.

Barclays Capital and Buckingham Research Group cut their price targets for GM to $1.

GM, based in Detroit, fell $1, or 23 percent, to $3.36 at 4:15 p.m. in New York Stock Exchange composite trading, in its lowest close since June 17, 1949, according to Global Financial Data in Los Angeles. The shares have lost 86 percent of their value this year. Ford Motor Co. dropped 9 cents to $1.93.

``We believe any government assistance would likely significantly dilute GM's equity,'' said Chicago-based Barclays analyst Brian Johnson, who reduced GM to ``underweight'' from ``equal weight'' and lowered his price target from $4.

Government Support

GM, Ford and Chrysler LLC, owned by Cerberus Capital Management LP, appeared over the weekend to be moving closer to gaining that federal aid. U.S. House Speaker Nancy Pelosi of California and Senate Majority Leader Harry Reid of Nevada wrote Treasury Secretary Henry Paulson to urge that bank-bailout funds be opened up for loans to automakers.

Rahm Emanuel, chief of staff to President-elect Barack Obama, said the U.S. auto industry ``essential'' to the economy.

While Emanuel stopped short of endorsing such a plan, the White House today signaled its opposition, saying aid to the industry wasn't discussed during the debate on the banking bailout. Congress may take up automaker assistance when it returns next week.

``GM's only salvation is a capital injection from the government,'' said Buckingham analyst Joseph Amaturo in a note today, cutting the automaker's share-price target to $1 from $3. ``The company liquidity position is dwindling rapidly given the automotive cash burn,'' said the New York-based analyst, who rates GM shares ``underperform.

`Stress Prices'

GM's 8.375 percent bond due in July 2033 rose 1.75 cents to 25.75 cents on the dollar, or less than half its price of two months ago, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The bond yielded 32.5 percent.

``Shareholders are likely to be wiped out, effectively,'' Bruce Zirinsky, co-chairman of the financial restructuring department of Cadwalader, Wickersham & Taft LLP, said in a phone interview from New York. ``If you look at the GM debt, it's trading at a substantial discount, at stress prices.''

GM asked dealers to petition the U.S. Congress for funds for the industry, saying the credit crisis is preventing automakers and suppliers from getting needed loans.

The automaker offered a proposed letter on its Web site suggesting dealers say that ``helping our industry in the short term will have a much lower cost than addressing the effects of a failed industry in the midst of an economic turnaround.''

Liquidity

GM, in a regulatory filing today, said the global economic and credit turmoil requires the company to find ``additional near-term liquidity support.''

``Based on our estimated cash requirements through December 31, 2009, we do not expect our operations to generate sufficient cash flow to fund our obligations as they come due, and we do not currently have other traditional sources of liquidity available to fund these obligations,'' GM said.

Capital markets have essentially been closed to the company and it's unlikely to secure borrowing in the near-term, GM said.

``Our ability to continue as a going concern is substantially dependent on the successful execution'' of plans to improve liquidity by $20 billion by the end of 2009, GM said in the filing.

GM hasn't posted an annual profit since 2004 and sales in the U.S., its largest market, have fallen every year since 1999.

Implied volatility for GM options exceeded 300, a level Lehman Brothers Holdings Inc. topped before its bankruptcy filing and American International Group Inc. reached prior to the U.S. government's bailout. Implied volatility, the gauge of option prices for GM at-the-money contracts expiring in 30 days, climbed 43 percent to 325.64 at 4 p.m. in New York, according to data compiled by Bloomberg.

GM's November $3 puts were its most-active contracts, with 18,042 changing hands. They more than doubled to 70 cents. December $2.50 puts jumped 65 percent to 91 cents. The contracts give the right to sell GM shares for a certain amount by a given date.

Is this wtf owed to bad grammar, my reading comprehension, or something that happened and I was un-aware.
i.e., Ford and Chrysler? GM, Ford and Chrysler or just Chrysler?

 

[SparkyJJO]

/cue the anti-american nutswingers cheering

 

[The Boston Dangler]

Originally posted by: SparkyJJO
/cue the anti-american nutswingers cheering

i'm not cheering. there's a lot of regular people about to lose their jobs.

management's incompetence brought them to this position - the same management that wipes their asses with money.

 

[shabby]

Originally posted by: GTaudiophile
Too bad. According to last night's TOP GEAR episode they're finally starting to make good cars.

Too little too late.

Took them only a 100 years to get to this point...

 

[Bignate603]

The thing is that this is a self fulfilling prediction. Enough people saying that their stock is worthless will make the stock worthless.

 

[foghorn67]

Originally posted by: Bignate603
The thing is that this is a self fulfilling prediction. Enough people saying that their stock is worthless will make the stock worthless.

yep. Sick of stock ratings.

 

[TehMac]

Originally posted by: Bignate603
The thing is that this is a self fulfilling prediction. Enough people saying that their stock is worthless will make the stock worthless.

Yeah, we can thank our friends the media. I'm waiting for them to announce we're out of the recession as soon as Obama is inaugurated.

 

[SSSnail]

Originally posted by: Bignate603
The thing is that this is a self fulfilling prediction. Enough people saying that their stock is worthless will make the stock worthless.

True, if enough people just short any company, it'll go under.

 

[Kroze]

Gm, ford and Chrysler need to die. That's how capitalism works.

Crappy/inferior cars & overpaid workers are to blame. It's funny they blame everyone else but themselves. How the hell do you justify paying a guy $50 an hour for putting on pinstripe? Because he got time in? LOL. Them idiots at UAW need to blame themselves for being greedy

 

[Kroze]

also blame the guy who decide to put fuel efficient cars on the back burner and build gas guzzling suv, trucks, and hummer LOL. I guess now they know it's a huge mistake bit it's too late.

 

[Falloutboy]

Originally posted by: Kroze
Gm, ford and Chrysler need to die. That's how capitalism works.

Crappy/inferior cars & overpaid workers are to blame. It's funny they blame everyone else but themselves. How the hell do you justify paying a guy $50 an hour for putting on pinstripe? Because he got time in? LOL. Them idiots at UAW need to blame themselves for being greedy

do you understand the effect that gm failing would cause to our economy? your talking 9 jobs for every 1 GM job that is lost. this doesn't factor in the additional employees that work and support the big 3, becaue if GM fails they all fail, because GM is the one thats keeping most 2nd and 3rd tear suppliers afloat, and without them ford and chrysler are equally fucked.

your looking at several million jobs gone.

the fault lies with GM in not have the forsight to deal with the unions in the 80s and 90s, but its also the UAWs fault for putting GM into this spot, if GM was allowed to modernize there lines like all other non US automakers have done, it would lower labor costs, immensly. also when gm needs to idle a plant because a certain vehicle is not selling, GM still has to pay the layed off employees something like 80% of there sallery to sit at home. which to me is absurd.

I really think the GM needs to have the goverment step in, and allow GM to break the agreements with the UAW, and to broker a new agreement that allows GM the flexabilty to be competetive.

 

[Zee]

Originally posted by: Falloutboy

Originally posted by: Kroze
Gm, ford and Chrysler need to die. That's how capitalism works.

Crappy/inferior cars & overpaid workers are to blame. It's funny they blame everyone else but themselves. How the hell do you justify paying a guy $50 an hour for putting on pinstripe? Because he got time in? LOL. Them idiots at UAW need to blame themselves for being greedy

do you understand the effect that gm failing would cause to our economy? your talking 9 jobs for every 1 GM job that is lost. this doesn't factor in the additional employees that work and support the big 3, becaue if GM fails they all fail, because GM is the one thats keeping most 2nd and 3rd tear suppliers afloat, and without them ford and chrysler are equally fucked.

your looking at several million jobs gone.

the fault lies with GM in not have the forsight to deal with the unions in the 80s and 90s, but its also the UAWs fault for putting GM into this spot, if GM was allowed to modernize there lines like all other non US automakers have done, it would lower labor costs, immensly. also when gm needs to idle a plant because a certain vehicle is not selling, GM still has to pay the layed off employees something like 80% of there sallery to sit at home. which to me is absurd.

I really think the GM needs to have the goverment step in, and allow GM to break the agreements with the UAW, and to broker a new agreement that allows GM the flexabilty to be competetive.

either broker a new agreement or GM needs to go under completely. it can't survive on it's current business model.

 

[Kroze]

I know people are going to lose jobs but in the end, it's for the better. The tax payer should have to support a company that is poorly run and managed.

 

[BUTCH1]

Sucks if they go under, I drive a GM car, where will I get parts??

 

[Chunkee]

Originally posted by: The Boston Dangler

Originally posted by: SparkyJJO
/cue the anti-american nutswingers cheering

i'm not cheering. there's a lot of regular people about to lose their jobs.

management's incompetence brought them to this position - the same management that wipes their asses with money.

This.!!!!! Those floating up at the top have not nor will they suffer. They have already gotten theirs...and ran it into the ground.

JC

 

[bruceb]

It is part blame on the unions. But it is more to blame on GM and other car makers in the US deciding to make too many variants of the same basic car and then, in my view, over producing them. There is no way a dealership needs 200 - 300 new cars on a lot at any one time. Go back to the way it was in the 1970 - 1980 (early) when the customer custom ordered the car and got it as desired in 6-8 weeks time. As to the post about getting parts for GM, that should not be much of an issue as most stuff is AC Delco which is a seperate subsidiary of GM (I think) .. I also own a GM car, as does my brother who has a Camaro, S-10, FIrebird and Colorado (about 2 years old) .. so parts will affect all of us. Mostly for stuff like body panels and interiors parts. But for engine, tranny, brakes & suspension, there are many good aftermarket suppliers.

 

[iamwiz82]

A good commentary from a Detroit News writer

It's a good read, other than the part about this being "our 9/11". Goddamn do I hate that term.

 

[Old Hippie]

I find this incredibly scary. :shocked:

Maybe it's because I'm 56 and have grown up when the auto US industry was thriving.

Maybe it's because I remember reading about and seeing the first generation imports from Saab, Toyota, Honda and others. Believe me, those cars were not a pretty sight and servicing was a nightmare.

Maybe it's because I remember the saying "As GM goes, so goes the country".

Maybe it's because I know many more will be affected other than the first tier workers.

Maybe it's because I realize bad decisions were made by Managment and Union officials that are going to drastically effect the health and welfare of the guy that just wants to work his 8 hours and go home to his kids.

I have never been one to kick a guy when he's down and I'm not going to start now.

I can only but hope that people more intelligent than I will work-out some kind of solution.

But for the time being, I'm sitting here with a lump in my throat and a pit in my stomach just thinking about current and past employees on both sides of the fence.

 

[ayabe]

I'm hoping that things will be ok, there's a chance if gas prices stay more or less where they are and we get the economy to stop backfiring, they could be just fine.

 

[RedArmy]

Originally posted by: ayabe
I'm hoping that things will be ok, there's a chance if gas prices stay more or less where they are and we get the economy to stop backfiring, they could be just fine.

How do you figure?

 

[Arkaign]

This is just one group's educated guess. It is a guess because nobody knows what's going to happen next. It's pretty doubtful that the (D) majority will let GM die, as it would be like a death knell to our economy. Millions of new unemployed within months, it would be total chaos.

 

[AdamK47]

Originally posted by: GTaudiophile
Too bad. According to last night's TOP GEAR episode they're finally starting to make good cars.

Too little too late.

Because Top Gear said so on Sunday. I like the show, but I hate it at the same time. "Car people" take their opinion as the end all be all final word. It's an entertainment show. For entertaining. Entertain.

 

[iamwiz82]

Originally posted by: AdamK47

Originally posted by: GTaudiophile
Too bad. According to last night's TOP GEAR episode they're finally starting to make good cars.

Too little too late.

Because Top Gear said so on Sunday. I like the show, but I hate it at the same time. "Car people" take their opinion as the end all be all final word. It's an entertainment show. For entertaining. Entertain.

That is the same with every show and magazine. People laud whatever they hear. That's why Civic SI's are considered fast, since Car and Driver said so .