This morning GM reported quarterly earnings of $1.3 billion dollars for the second quarter of 2010 on revenue of $33 billion, up 43% from a year ago. If you like your earnings expressed as EBIT (which GM does-or earnings before interest and taxes), then the profit was $2.0 billion. This is the largest quarterly earnings report since 2004.
Most of the earnings, $1.6 billion’s worth, came out of GM North America, while GM International also posted a gain of $700 million. GM Europe continues to be GM’s anchor, losing $200 million…which really is quite hard to believe astonishing. Cash flow from operating activities was pegged at $2.8 billion and GM was left with $32.5 billion in the bank going forward. (including monies in escrow)
The numbers are a success for GM in more than just a reported bottom line number. They are, in essence, the completion of the work that Chris Liddell (GM Vice Chairman and Chief Financial Officer) was brought in from Microsoft exclusively to do, namely resurrect GM’s finance quickly and get out the IPO. If there is one thing the former CFO of Microsoft knows better than anyone else how to do, its ‘hittng the number’ and managing expectations…his run at Microsoft was near flawless. Mr. Liddell’s track record of achieving all goals set in front of him continues at GM.
Don’t believe that Liddell was brought in primarily to set the table for a IPO? Follow the money. Chris Liddell is paid $750,000 per year by GM, but he gets 5.45 million in stock specifically if the IPO is a success. That 5.45 million is money that will be well earned. Mr. Liddell now seems well suited to take over the company when current CEO Ed Whitacre Jr. goes silently into the night.
On the earnings report, Mr. Liddell assesses his (and GM’s) accomplishment, “I am pleased with our progress on achieving our business objectives, we have delivered strong product, maintained cost discipline, progressed strategic initiatives such as restructuring Europe and acquiring AmeriCredit, and delivered two consecutive quarters of profitability and positive cash flow.”
The question since GM left bankruptcy protection and started to file quarterly earnings again was not would they turn a profit…but would they show enough? Would the balance sheet stay pristine? Could sales strengthen in a tough environment? The short answer is yes. It has been such a success that the reclusive Mr. Whitacre came out in public over 1 time this month to talk about what a success the Q2 earnings would likely be ahead of the news today…a personal best in appearances for him.
Now does this mean that it was a smart financial move in the long run to buy sales and show a profit at all costs for the quarters between bankruptcy and today? Can you justify incentives once again cresting $4,000 (Edmunds) when the company is supposed to be returning to fiscal discipline? Can a company that had said only a year or so ago that a fleet level of over 20% of sales was unacceptable, now really think bumping that number up to 31% to ensure year over year sales increases is turning the corner? How about the ‘undeletion’ of a 1,000 dealers previously said to be undesirable? Good move? How about the addition of AmeriCredit so they can sell cars to the sub-prime customers that really shouldn’t be buying them? Is that savvy? Is the announcement of re-acquiring a 5 billion dollar line of credit really a net positive?
The answer is a resounding maybe.
Normally I am a pessimist and would say no, these examples are hideous ways to do business, this is old GM. However, in this case, GM did these automotive atrocities with a purpose…not to just keep the paychecks running to the top of the Ren Center as long as possible and to push their problems down the road a little further. These crimes against common sense were done to set table for the IPO, to make the company go public this year, and to make this offering live up to even a fraction of the lofty expectations placed on it. In other words, these insanities were done with a sane reason, and that makes them acceptable. The potential reward is greater than the risk taken.
With the two successful quarters reported and out of the way, the next step is to file for their IPO with the SEC, and then to rid itself of some of the 61% government ownership in the company (and to raise a little cash for themselves of course).
At the time of press, ‘sources’ inside GM say the company will file with the SEC on Friday, meaning the company will be on the open market again before elections in November. (With ‘sources’ in this case likely being the same fellows who penned their quarterly earnings announcement) GM’s IPO will likely be the largest in American history.
Will the fall sale of GM be a success? That question still remains unanswered. But regardless of the end result, GM has done their very best (or worst) to convince the world that they are a company that can grow, make money and sell cars. A necessary evil these days in the world of automotive IPOs (Tesla anyone?)
Their strong balance sheet, flush with government money, has let Chris Liddell wave his magic wand over GM’s sales and quarterly earnings, and sell the heck out of company that has no business being valued as high as they ultimately will be on that fateful day in November when the public once again lines up to buy shares of the American institution; but if they are disciplined enough, someday they may actually be the automotive juggernaut they are attempting to convince everyone they already are.
Once the IPO is complete, I expect GM, under Chris Liddell’s leadership (either as CFO or CEO), to attempt to right the ship very quickly. The streak of monthly year over year sales gains will come to a end. Fleet sales will drop. Incentives will fall. No longer will the starting point of negotiating to buy a Silverado be $5,000 off.
In truth, GM likely will make little to no profit in the quarters after next…maybe even show some losses, the share price (post government IPO exodus) maybe in the red, but make no mistake, the company will be much healthier then than now…and firmly on the right track to return to glory.
/thanks to Chris Liddell
+8
Aug 12th, 2010 (8:07 am)Great job, Statik.
Be well,
Tagamet
+1
Aug 12th, 2010 (8:12 am)So I guess all is fair in love and war and IPO.
/ are you sure Liddell wouldn’t be better off just taking his $5 million and moving on to the next ‘challenge’?
+1
Aug 12th, 2010 (8:17 am)Honestly, I don’t know if this is truly good news, or just financial machinations and posturing. But I WILL be somewhat comforted when GM is under public ownership again. Our government has enough horrible sh–, er, make that “unpleasant situations,” to deal with right now, without being in the car business.
Now if they (the feds) would just stop using a million backhoes to dig the debt-hole deeper every day…
+9
Aug 12th, 2010 (8:20 am)Wow Statik. Your articles just keep getting better and better. You should write for the Economist. Yur level of reporting and analysis is on another plane above the average. If I read 10 articles on the automotive industry I’m sure I could pick yours out without seing the authors listed. Go canuck go!
+1
Aug 12th, 2010 (8:23 am)Yes Yes Static….but should I buy at the IPO?
Take Care,
TED
+1
Aug 12th, 2010 (8:26 am)As always, Statik, you have done a great job in analyzing the situation. I hope you have it right.
Aug 12th, 2010 (8:27 am)Statik, is this guy your brother-in-law?
-2
Aug 12th, 2010 (8:29 am)GM will be healthy until the unions are able to strike again. By that time, the Volt will have convinced enough competitors that EREV’s are the way to go, then GM can make more money licensing the tech than building it.
Also, by that time, Chinese automakers will have entered the US market, signaling the end of US automakers
-17
Aug 12th, 2010 (8:33 am)(click to show comment)
+2
Aug 12th, 2010 (8:33 am)I totally disagree with the above article. I believe GM has a great chance to move forward as the leader in the new electrification of transportation global industry.
Now, perhaps the author would love to raise some doubt and help make the IPO fail, perhaps to fulfill previous negativity, but I and many others here actually want GM to be successful in this IPO.
If successful, GM can get free of the government, pay back the American people, instill new hope for those following the Volt program and motivate GM’s employees to get up in the morning and help change the world.
GM took an early risk (yes, they had to but that’s besides the point – the actions were taken) and now have a real lead. They invented the Volt, a breakthrough vehicle that can really help to shift us away from unsustainable fossil fuel use.
So, I hope there are enough people out there that push away the negativity surrounding GM and look towards the future. See the advantage GM now holds. Heck, they even have a great reputation in China and should lead to strong growth, even if we do hit global petroleum production problems. In fact, that would put GM in a true leadership position.
Go GM and good luck in your IPO. May it be a great success that leads to the timely release of the Volt and all great electrified products to follow.
+4
Aug 12th, 2010 (8:39 am)Great article Statik, but given the way this Liddell is fighting to get GM back on track, are you sure his first name isn’t Chuck?
I really, really, want to see the US divest itself of ownership of GM, but what I wonder is whether we are going to take a bath and lose billions or maybe, best case, we lose just a little so the government doesn’t get a taste for taking over industries. It really irritates me to see friends that have been calling for choices that would reduce our reliance on foreign oil, now bashing the Volt due to its being produced by government owned GM. I understand their abhorence for what the government has done, but calling the Volt a lemon or a Voltswagen is biting off your nose to spite your face.
-1
Aug 12th, 2010 (8:45 am)All I have to say is WOW.. that was HARSH…
Aug 12th, 2010 (8:46 am)Lipstick on a PIG …
They are dressing it up, pulling out all the stops to find buyers for the IPO
Why would someone even think of buying GM stock when everyone got burned, even the bond holders in the “old” gm. I’m sure the IPO will pop, then fade as all the MBA magic on the financial numbers unravel in the months to come.
+2
Aug 12th, 2010 (8:46 am)“How about the addition of AmeriCredit so they can sell cars to the sub-prime customers that really shouldn’t be buying them? Is that savvy?”
Yes. People will pay their car payment even if they have eat soup for every meal. Wells Fargo and others are not lending unless you have a very high documented income vs debt, or, your FICO is well above 700. You can’t sell cars without financing.
“I expect GM, under Chris Liddell’s leadership (either as CFO or CEO)…”
I disagree. Liddell will hang in there as the turn-around-team until after IPO. After the new entity is stable, he’s off to the next disaster. Having gone through several CH11 bankruptcys in the wireless business, I have watched these turn-around guys come in, do their thing, and then hand it off to an operations team. Whitacre will leave as well. He’s not really a car guy.
Other than these two nit-picky things, this is a great article Statik. Good Job!
+1
Aug 12th, 2010 (8:50 am)You’re welcome to your opinion, but what’s to disagree with? Statik just stated the facts, with very little spin, and let’s the reader draw their own conclusions. From comments 1-9 I think most agree with that. JMO
Be well,
Tagamet
+5
Aug 12th, 2010 (9:02 am)“Now does this mean that it was a smart financial move in the long run to buy sales and show a profit at all costs for the quarters between bankruptcy and today? Can you justify incentives once again cresting $4,000 (Edmunds) when the company is supposed to be returning to fiscal discipline? Can a company that had said only a year or so ago that a fleet level of over 20% of sales was unacceptable, now really think bumping that number up to 31% to ensure year over year sales increases is turning the corner? How about the ‘undeletion’ of a 1,000 dealers previously said to be undesirable? Good move? How about the addition of AmeriCredit so they can sell cars to the sub-prime customers that really shouldn’t be buying them? Is that savvy? Is the announcement of re-acquiring a 5 billion dollar line of credit really a net positive?”
Hey Statik are you a stock broker and would you be willing to help me build my portfolio? Always great to get your perspective on the financials. The way I read this though is that the pressure is from the government to get the IPO out by November so the Dems can say we saved GM and made it public again. So they are sacrificing doing the right thing with a fresh start for doing the expedient thing to help those that saved them. I guess politics are behind most big decisions but as the saying goes two wrongs don’t make a right.
+3
Aug 12th, 2010 (9:20 am)Not to beat an already dead horse here, but that was a spectacular article. Analysis articles in many publications don’t often have such clarity. Then again, I suppose this shouldn’t surprise me.
For EVs to be a success at GM, the company must get financially healthy and start spending loads of money on R&D like its Japanese competitors (or any reasonable engineering-reliant company for that matter). With inherent disadvantages like relatively high pension/labor costs and market manipulation favoring foreign competitors, the only way GM can stay ahead is by innovating the heck out of the automobile for performance and cost reductions. All I really care about is GM helping along the electrification of the auto and reducing reliance on oil, not that they are market leaders. Hopefully Ford steps up to the plate as well like they promised. The more the merrier.
Aug 12th, 2010 (9:22 am)Good article Statik. Now stay tuned for the IPO I guess and see if any fish take the bait!
+1
Aug 12th, 2010 (9:30 am)Maybe all this profit means they could sell the Volt cheaper?
+1
Aug 12th, 2010 (9:47 am)Are you sure you read the article all the way through, I think Statik is agreeing with you.
What I got from the article was that he thinks GM has been selling the IPO harder than their cars, and that it was a good idea to do that, but the IPO will probably be overvalued near term, but they might someday be the worlds best again and will be worth the money paid when they go public. In business a company can be both overvalued and very successful
+4
Aug 12th, 2010 (9:53 am)Hmmmmm………. one of the main reasons GM became bankruptcy fodder was that it started focusing on the quarterly numbers and stopped focusing on its products. Not sure Chris Liddell is the exactly the right guy to avoid this. His run at Microsoft might have been “flawless” in some respects but it also coincided with Microsoft becoming a cash cow devoid of innovation. If you compare Microsoft with Apple it’s something of a joke, as can be seen from the changes in the market caps of the two.
Of some interest is that the IPO is designed to reduce the government’s ownership below that magical 50% level. I’m sure there’s no significance to that with the election coming up. Whitacre has been focused on this but I’m not sure that it will actually be good for GM. Getting below 50% might cause the conservative media to stop hating on GM and the Volt, but in all likelihood the attacks will intensify since anything that even remotely suggests a success for Obama gets opposed automatically. So doubtless we’ll see more of this silly stuff: http://mediamatters.org/blog/201008100033
Actually what’s funny is the silliness of attacking the Volt “cause it’s a car for the wealthy” is, if true, and it probably is, obviously good for GM. Assuming the Volt is the car of choice for young, wealthy, urban professionals, if you’re a car company, isn’t this the demographic you want buying your vehicles? I think Bob Lutz more or less explicitly said this was the goal, so he seems to have been on the right track, even if he may have missed the point that EVs are a product category unto themselves. (We also have the question of what exactly is wrong with a government policy of discouraging sending money to Iran, Saudi Arabia, Venezuela, and terrorist organizations — but that’s a different question).
Aug 12th, 2010 (9:56 am)Average sales price is up 5% to $32+K. This, combined with sharply lower costs (debt, labor, and materials) equals profits regardless if incentives have only come down slightly.
/Volt at $33,500 after rebate is not that far from their average sales price.
Aug 12th, 2010 (10:03 am)You can’t seriously be questioning whether facilitating the GM bankruptcy was right, are you? It’s hard to believe that any American president would have simply allowed GM to disappear under the circumstances that prevailed in 2008. George Bush certainly didn’t. And Obama certainly didn’t.
If you note, Obama is always careful to say that GM will pay pack all the monies advanced to it by “his administration”. The “kick the can down the road” monies provided by the Bush Administration aren’t included in that. Those will be recovered, if at all, through any “profit” from the later cash infusions, which means they’re not likely to be recovered. But while not all taxpayer money advanced to GM will be recovered, I’m surprised that anyone at this point would still be claiming that doing so was “a wrong”, unless of course you think 20% unemployment is better than 9.5% unemployment.
+4
Aug 12th, 2010 (10:07 am)Have you looked at China’s trade surplus lately? Without a renmimbi revaluation, there’s no way that the US government will allow them to enter the US auto market. As it is, they’re headed for sanctions…
Post renmimbi revaluation, I doubt their cost advantage will be worth the expense of shipping the cars over here.
+3
Aug 12th, 2010 (10:07 am)Here some news Whitacre is stepping down starting September 1st. Who will be next? I still think someone from marketing.
Aug 12th, 2010 (10:10 am)Whitacre on the conference call just stepped down as CEO of Sept 1
Will be replaced for now by GM board member Daniel Akerson, the managing director and head of global buyout of The Carlyle Group. He will continue as Chairman until Dec 31.
(No secret he was just there to get this IPO done, but a little surprising he chose today…overshadows the other news somewhat)
+1
Aug 12th, 2010 (10:12 am)Whitacre will step down……
http://www.bloomberg.com/news/2010-08-12/gm-s-whitacre-will-step-down-as-chief-executive-be-succeeded-by-akerson.html
+3
Aug 12th, 2010 (10:19 am)Looks like we really won’t find out the CS-mode efficiency of Volt or the rating for Cruze prior to IPO.
With both high-profile vehicles for the new GM and both placing heavy emphasis on MPG, not knowing what they will actually deliver is an interesting situation for investors.
Aug 12th, 2010 (10:23 am)US has been carping about China’s currency valuation for years (if not decades) to no avail. I see no change in that situation, even with the carrot of entering the US automarket – especially now that China’s auto market is larger than the US, and less stringently regulated for safety and emissions.
+1
Aug 12th, 2010 (10:23 am)Actually Tagamet there is some misleading information in this article – and that surprises me as the article is well written, but not completely factual ?
1) GM Europe lost 160 Million Not 200 million
- This is an improvement compared to 500 million lose in Q1
2) GM incentives for July were $3617 per Edmunds Not $4000.
- This is an improvement compared to June incentives which were $3893
+1
Aug 12th, 2010 (10:28 am)Great article. And I agree with most of it.
However, I think that Americredit was a net positive. GM needed a captive finance unit. It enables them capture some of the financing market. (Which is very profitable.) They’d dealt with Americredit before. Also, they got a pretty good price on it.
Besides, subprime auto loans are not nearly as risky as subprime mortgage lending. The default rate is much lower. And the last thing GM needs is for all buyers with spotty credit histories not being able to buy their cars. Or getting better terms elsewhere.
Also, a line of credit is not a bad thing. At some point, GM might need to go to the credit markets again. This is a necessary step towards an IPO, IMHO.
Aug 12th, 2010 (10:34 am)Not sure if you’re being sarcastic. But, no. Definitely not.
Although, there’s a rather strong possibility that the stock will perform regardless of actual value. And not just for an immediate pop like Tesla. All the banks will have a rather strong incentive to issue “buy” recommendations….
+2
Aug 12th, 2010 (10:36 am)Whitacre stepping down before the IPO?
Wow.
That’s 3 CEO’s in what… a year? The captain’s chair at GM must be a real hot seat.
-11
Aug 12th, 2010 (10:37 am)(click to show comment)
+6
Aug 12th, 2010 (10:37 am)After having labored for over 10 years in a non union workplace. Only to see the company fold under the weight of rising oil prices. I was never compensated for my last week of work. The company simply ran out of money. I didn’t take them to court. I did the right thing and quietly accepted a position at another company.
Two weeks ago I ordered a new 2011 Volt. One of the main reasons is because I want to do what I can to support American and Canadian jobs. Together we rise or we fall.
I wanted to state this up front before typing the following: GM employees are the blood and muscle of the Detroit auto industry. When the word “strike” makes National news. It makes American made cars look bad. It makes American workers look bad. And it makes GM stock smell bad. Something should be done to keep the lid on union flair ups and sick outs. America won’t appreciate another round of this.
=D-Volt
+1
Aug 12th, 2010 (10:41 am)“Uneasy lies the head that wears a crown.”
Shakespeare’s Henry IV. Part II, 1597
=D-Volt
-1
Aug 12th, 2010 (10:44 am)The numbers aren’t misleading…it’s just the way accountants report numbers by rounding.
As for the incentives, what was the value of Toyota’s incentives? Whereas I would not dispute Statik’s info, I would have liked to see a comparison to one or two other manufacturer’s incentives. You can’t be too critical of GM’s incentives of $4,000 (or $3,617) if Toyota, Ford and Honda is offering something similar.
+1
Aug 12th, 2010 (10:50 am)Whether it’s an overt strike / sickout or other passive aggressive means, it does not matter. It will happen, as I have seen it over and over again in my career. It is very easy to demonize someone making more money than yourself, and that is all unions need to cripple the auto industry.
Aug 12th, 2010 (10:55 am)True. But we didn’t have 17% U6 unemployment for decades. It’s been two years since the onset of the credit crisis, and the economy is still horrendous. At some point, Washington is
going to have to care about what the electorate wants. And right now that’s jobs, jobs, jobs.
They may or may not be able to force China to revalue. But they can certainly keep them out of our auto market. And there’s no way they’ll be willing to lose all auto manufacturing related jobs any time in the foreseeable future.
+3
Aug 12th, 2010 (10:56 am)Hi Statik: I respectfully disagree. This historic milestone belongs to Whitacre and his team. Secondly, CFO Liddell will be rich and famous but hardly the best for CEO. While GM was run decently by a beancounter b.a. (before Whitacre) that was solely a consequence of the real CEO being sacrificed to the bailout gods. The CEO of GM must be first and foremost a proven sales leader. Sure, Liddell could well harbor ambitions to be CEO; and maybe he can bull his way there. But he’ll be putting self-interests in front of GM owners interests.
Yes, this IPO is a biggie. To achieve Big Board kinds of financials GM must get back to sales in the 750,000 units/mo. No small task. Ford couldn’t do that if they gave cars away. Toyota couldn’t do that. Core GM is locking-up majority market share.
Ward’s July 2010 GM light vehicle reports sales at (approx.) 200,000 units. That’s roughly a quarter of the way there. Now if they have to get there spitting dimes while standing on their head – so be it. Just win, baby. Here they proved being able to turn a respectable profit while engaging in standard auto industry sales tactics. Good for them.
This is not the time to gloat. Just look over that Ward’s spread sheet report. Competition is ferocious. Certainly not the time to experiment. GM rebounds on fundamentals. Buyers, buyers, buyers. We got to this point because of excellence in North American engineering, production as reflected in union pride, and superior sales strategy.
+1
Aug 12th, 2010 (11:01 am)I think he was probably just rounding for sake of the article, all the other numbers are shown as even hundreds of millions.
Also, you are completely wrong about the incentives Statik quoted, you are looking last year’s edmunds report
July 2010 was $4,093. That $3,617 you quoted was from July 2009.
http://www.edmunds.com/help/about/press/164767/article.html
Aug 12th, 2010 (11:10 am)Auto incentives have been going up industry wide. At least, partially due to the Toyota fiasco. They rolled out the incentives after their problems started hitting the news, starting an industry-wide incentive blitz.
http://www.autoblog.com/2010/03/16/report-toyota-kicks-off-industry-wide-incentive-blitz-for-march/
However, GM’s incentives are well over the industry average.
http://www.autoobserver.com/2010/08/gm-earns-13-billion-profit-in-second-quarter-as-ipo-looms.html
http://www.autoobserver.com/2010/08/model-year-end-clearance-incentives-drive-july-sales-edmundscom-reports.html
Of course, incentives by themselves aren’t the whole story. If GM builds more margin into their original prices to compensate, it doesn’t necessarily cost them any more money. Operative word being if…
Aug 12th, 2010 (11:29 am)With Whitacre stepping down and the CEO position being filled by Ackerson, does this mean that Liddell will not be CEO? As in Never?
Aug 12th, 2010 (11:37 am)There is a new thread up.
Be well,
Tagamet
Aug 12th, 2010 (11:40 am)Not sure if I’m agreeing with you or not, but I dont think a company should ever be lead by a beancounter/accounting/CFO type person. Yes, they should be there as a tool for the CEO, but the company’s president shouldn’t be paralyzed by dollar figures.
+1
Aug 12th, 2010 (11:41 am)Don, I think Bush’s policy towards GM was far worse than Obama’s. Bush didn’t have a plan and basically played the push it off on the next guy approach.
What I was saying in my quote is that the government now owns a car company which the majority of the American people don’t like and playing politics they are seemingly making bad decisions for “THE TAXPAYERS” car company to further their political careers.
I’m not going to pretend I had a better idea and I don’t like the idea of letting thousands of people get fired because of a few execs at the top, but I also don’t want the government running private industry. The government doesn’t exist to take care of our every need and shouldn’t control more than they have to.
Aug 12th, 2010 (11:42 am)Doesn’t it inevitably always come down to the dollars?
Be well,
Tagamet
Aug 12th, 2010 (12:02 pm)I am getting worried about the LACK of information about MPG especially the VOLT. Most automakers make a big deal of high MPG for their cars. If the CS mode MPG for the VOLT is really low (a design flaw??) … not a good selling point.
Aug 12th, 2010 (12:04 pm)I think beancounters typically are not risk takers or visionaries. They are only concerned about the money and less about the product. They don’t care much for leading the company into the future. Yes, there are always exceptions. but this is my experience. No risk, no reward.
+1
Aug 12th, 2010 (12:08 pm)kdawg:
Not sure if I’m agreeing with you or not, but I dont think a company should ever be lead by a beancounter/accounting/CFO type person.Yes, they should be there as a tool for the CEO, but the company’s president shouldn’t be paralyzed by dollar figures.
The conventual wisdom indicates if the engineers and innovators make the major decisions a manufacturing company thrives with great products. When the bean counters make the major decisions the bottom line looks good (for awhile) but products become BLAND and quality tends to be under pressure. ( was this what the old GM had become ???)
+2
Aug 12th, 2010 (12:18 pm)Hi #45 Kdawg & Tag:
CFO in a Big Board company is an incredibly complex challenge. Its a whole lot more than accounting. For one, there’s far reaching international compliance needs. Each item of a balance sheet must be supported by vast departments. Above all, CFO’s bailiwick must be punctiliously independent.
Usually but not always, purchasing falls under the CFO. Internal auditing is a full-time job. The quarterlies are full time. All the while, CFO must keep Leadership apprised. Most of the time, CFO is a thankless position – no glory. So its no wonder when a CFO moves – its big news. A competent productive CFO is worth her/his weight in gold. It should pay decent. But the CFO job is not a sales/customer/buyer training ground.
+1
Aug 12th, 2010 (12:35 pm)__________________________________________________________
Wow. Impressive writing Statik! (I mean it).
My favorite part:
“these insanities were done with a sane reason, and that makes them acceptable”
I’m going to keep that one in my back pocket; it could come in handy one day.
———————–
Electric Cars + Nuclear Energy for a more Energy Secure World!
___________________________________________________________
+1
Aug 12th, 2010 (12:53 pm)Tagament, you don’t feel the following to be open for agreement or disagreement?
“Normally I am a pessimist and would say no, these examples are hideous ways to do business, this is old GM. However, in this case, GM did these automotive atrocities with a purpose…not to just keep the paychecks running to the top of the Ren Center as long as possible and to push their problems down the road a little further. These crimes against common sense were done to set table for the IPO, to make the company go public this year, and to make this offering live up to even a fraction of the lofty expectations placed on it. In other words, these insanities were done with a sane reason, and that makes them acceptable. The potential reward is greater than the risk taken.”
Perhaps you just love Statik too much to be open for discussion? Not me. Sure, he might be a fine person but this post was extremely negative and I simply disagree with his analysis (not the actual facts). Is that OK? You see, facts are not usually simply posted in any random way. They are used to support theories, debates, rants, simple posts, bar fights, etc. In fact, I’m guessing two different authors could use the same exact facts and one would make GM look like an evil empire out for a quick buck before screwing the common man while the other would make GM come out smelling like roses, ready to save humanity.
You can’t tell who wrote an article on GM-volt simply by reading it? You have to read the Lyle or Statik in the Posted By line?
Aug 12th, 2010 (1:00 pm)+1
Aug 12th, 2010 (1:24 pm)The American people have already been paid back with interest. The IPO will be gravy on the table to go with the Turkey and Dressing.
Happy trails to you ’til we meet again.
Aug 12th, 2010 (1:26 pm)This is a HUGE success for green cars and electrification. With GM showing huge profits and losing the Fed’s malingering, the revolutionary Volt will prosper. The author Statick is far too cynical considering his negative comments in the past. Big government types dislike the private sector which they feel owes them something. What that something is turns out to be a plaintive need for respect – to assuage their envious souls. The story of GM’s turnaround and emergence as THE world class leader in electrification of transportation annoys these secret socialists.
What GM and the Volt project proves is you CAN turnaround the most ancient, sloth-like corporation and turn it into a relevant, productive company. Indeed Chris Liddell has engineered the finance portion of that. And it serves as a brilliant example for other aging corporations. But GM’s success is the result of an excellent team of engineers and finance experts and the ongoing support of Bush/Obama’s Whitehouse. And of course Lyle right here on GM-Volt where visionaries and enthusiasts have supported the Volt project from the start.
All in all this is a banner day for the rebirth of American manufacturing and world leadership in electrification of transportation. This is a step toward a sustainable future, free of struggle over oil and petroleum resources. It is a cleaner, more efficient method of propulsion that signals a human desire to move up the evolutionary ladder.
We should all be proud of this announcement which further confirms our belief and support for a vision that leads the world to a better place. Bravo!!
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Aug 12th, 2010 (1:41 pm)Perhaps this should clear things up for you:
“General Motors on Wednesday took a big and symbolic step toward shedding the stigma of government ownership when CEO Ed Whitacre announced the company had repaid the remaining $5.8 billion of $8.1 billion in government loans.
“GM has repaid the U.S. Treasury and Export Development Canada loans in full, with interest, years ahead of schedule,” Whitacre said at a press conference in Fairfax, Kansas this morning. “GM’s ability to pay back the loans ahead of schedule is a sign that our plan is working.”
GM still has a way to go before it can claim independence. It owes an additional $45.3 billion to the U.S. government. That will be repaid when GM makes a public stock offering, which GM executives have indicated is likely to happen next year. “
Aug 12th, 2010 (1:58 pm)Lyle & Statik: New GM CEO Dan Akerson has an engineering degree — U.S. Naval Academy!!!!, a Master in Economics, and a Big Board strong CEO background. If he can do as CEO what he did at Nextel GM will regain as world auto leader. Secretary Geithner placed Akerson on the GM board in July 2009. These are impeccable credentials for the job.
I posted this partly because this morning (West Coast) Tags, Kdawg & myself were defining what a CEO should be. (Now why didn’t GM check in with us first…)
Here’s a biography from Business Week
http://investing.businessweek.com/businessweek/research/stocks/private/person.asp?personId=93549&privcapId=23333&previousCapId=23473&previousTitle=Thomas%20H.%20Lee%20Partners,%20L.P.
Aug 12th, 2010 (2:05 pm)I really think that we are all on the same page. I was using a meat cleaver, and you guys have scalpels. Maybe I should have said *eventually* it comes down to the $$$. “Inevitably” feels pretty close.
Be well,
Tagamet
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Aug 12th, 2010 (2:19 pm)I’m not sure how you’re using the “quote” feature, but it made it look like I was the one you were quoting. BTW, it’s Tagamet (no “n”), but I get that a lot
Statik and I spent YEARS here dueling about the Volt and it’s production. He’s the Yin to my Yang, and yes, we’re friends (I’m proud of that).
In my actual post, as I remember it, I said that your opinion and mine differ. Can I tell the difference between Lyle and StatiK? OF course, but that in no way reflects on either of their inputs. I respect both and disagree, as necessary (With Statik, more often than not!) . I just scrolled back up to your post to see what I’m supposed to respond to and find that I can’t figure that out. (Shrug). If it’s any help, I respect your opinion too.
Be well,
Tagamet (No “N”)
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Aug 12th, 2010 (2:19 pm)And if he can do as CEO what he did at NEXTLINK (aka XO Communications) GM will file Chapter 11 in three years.
Aug 12th, 2010 (2:34 pm)You mean that you didn’t get the GM memos? (g).
Be well,
Tagamet
Aug 12th, 2010 (3:17 pm)What the bio does not say is that Arkerson hasn’t really worked in 10 years. He got the job to run XO in 1999, and less than 3 years later it was in bankruptcy, he was forced out 6 months later, and has been a outsider since. Nnot sure that is a slamdunk for GM, the worlds largest automaker can do better.
Aug 12th, 2010 (7:24 pm)The lower costs from bankruptcy and commodity deflation built in extra margin unless GM lowered MSRP’s in the last 2 years. It’s possible they did but I haven’t read anything that this has been the case. I believe they’ve kept pricing pretty firm and average selling price actually increased in the most recent quarter, so they should be getting more margin even if incentives are similar to what they were in the past (I believe they are slightly lower too).
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Aug 12th, 2010 (8:13 pm)Funny, I thought I had said almost the same thing as you just did. although not mentioning any figures. Nothing needs to be cleared up for me. I expected someone like you to post a comment like this one.
Your figures come far short of the complete story. You need to factor in the financial equivalent of all the jobs saved and the income taxes garnered from those fortunate employed workers, and the corporate income taxes that GM will be paying or has paid. And harder factors to put a dollar on as in stimulus of new industries/businesses that are off-shoots . How about all the companies supplying parts/components. It’s hard to measure today but in the future historians will be able to study this situation in depth and give us a more realistic picture of how the government action to save the American automotive industry succeeded. I would like to see a report out of the Government Accounting Office on how much interest the government received on the loans you mentioned. Just considering the TARP loans by the Obama administration, it would seem that those loans alone where good investments. The final results aren’t out yet and probably won’t be until the last Government owed stock shares are sold.
Happy trails to you ’til we meet again.
Aug 13th, 2010 (9:35 am)IPO Update – may be delayed a couple days becuase of CEO change/ammendment to S-1 needed:
—
(Reuters) – General Motors Co GM.UL might delay its filing for an initial public offering to early next week from the initial target date of Friday after the unexpected departure of Chief Executive Ed Whitacre, sources familiar with the situation said on Thursday.
GM’s several-hundred-page prospectus, which it will file with the U.S. Securities and Exchange Commission, is complete, but GM may need to include an additional risk factor regarding the sudden management change, one of the sources said.
The source said the IPO filing could still come as soon as Friday and would be delayed “no longer than a few days.”
http://www.reuters.com/article/idUSTRE67B4JW20100812
Aug 14th, 2010 (11:36 am)They could, but why would they ?