GM Stock In Plus Territory
GM stockholders, especially the large stockholder in Washington, DC, have reason to rejoice: Today, GM shares “topped their 2010 initial public offering price, which will help the automaker’s largest shareholder, the U.S. Treasury, pare its losses,” Reuters says.
The price in the November 2010 IPO was $33.00. Today, the stock rose as high as $33.58 in morning trading.
According to Reuters, “the run-up in the stock price could help Treasury, which provided GM with a $49.5 billion bailout, trim losses that will likely still total billions of dollars. Treasury said earlier this month that it would begin another round of sales of its 241.7 million GM shares.”
Executives at GM told Reuters “that putting this issue behind them will improve the company’s image and boost sales, as they believe some consumers have held the bailout against the company.” For a current GM quote, click here.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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Some years ago, during a previous stock market boom, Business Week ran a cover story with a headline something like "a boomimg stock market is not proof of management genius". GM has deep-seated problems that start at the executive level. They cannot afford to treat a general stock market rise as a "get out of jail free" card.
@Buickman- There is absolutely no doubt that labor costs set the stage for the financial crisis induced market collapse that nearly destroyed the whole US industry. IF they had been able reduce costs in line with business realities, they would have been able to maintain profitability even at reduced volumes resulting from strong competitors, and yes, bad decisions. No company could survive ever increasing labor costs with declining sales volumes and all three US makers were financially depleted as a result. Ford was just lucky to be in trouble earlier, before commercial credit completely dryed up. They have a mountain of debt today which will handicap them in competition with Chrysler and GM, in particular. It isn't that complex, really. From the standpoint of business efficiency, retiree health care and the Jobs Bank alone took $8Billion a year from GM's bottom line as pure waste in comparison to foreign transplants and off shore competitors. I don't blame "Rosie the riveter" but "her" elected UAW officials who sold the lie that the automakers could afford paying and providing health care to every worker they ever had for the rest of their lives! CAFE was another element that harmed US makers uniquely and helped deplete them financially with the requirement that they redesign their fleets to meet regulations rather than consumer damand, and build loss making small cars here, unlike every foreign competitor who merely import them from markets where they are in demand.
If you don't know what a loan covenant or DIP financing is, you are clueless as a baby about what really happened in 2008-9. It was effectively not a bailout, but a double bankruptcy (GM and Chrysler) managed by US politicians because there was nobody else in the world at the time who could do it. Not that there was anything NOT wrong with that. Who can trust a politician? Even so I thought they did a decent job, the main shame, imo., was with the two bankrupt companies and their managements. There is a reasonable probability that either GM and/or Chrysler (or conceivably even Ford) might go bankrupt during the next US recession (comin' right up, folks). So then what, we sell Chrysler to Fiat and GM to the Bank of China, a wholly owned subsidiary of the Communist Party of the Peoples' Republic of China. Not many viable options would be left in case of such an unhappy event.
@CJ in SD- The headline of the JD Power link= "Toyota Motor Corporation Models Receive Seven Awards; General Motors Models Receive Four"- looking further into the data, Toyota and GM dominated the top 3 model places. I will give you that having top models in each segment doesn't refute the overall ratings in which Honda does look better than GM. The movement in these rankings, Audi falling a dozen places in Long Term Dependability a year or so ago for example, shows how volatile the rankings can be. Didn't Ford suffer because of infotainment glitches in recent times? The point, which I suppose I exaggerated with the Honda comment, is that GM is not a backmarker in today's quality sweepstakes, but has solid results. In GM Powertrain, we focused on powertrain rankings, the things within our control. Drilling down into the details, we had been doing quite well for a number of years before the collapse of '08.