Fitch Ratings Pegs GM's '08 Cash Burn at $8b

Edward Niedermeyer
by Edward Niedermeyer
fitch ratings pegs gms 08 cash burn at 8b

Fitch Ratings released a report yesterday warning that GM and Ford are facing a severe cash drain in '08. Fitch rated both GM and Ford at "B" levels, a non-investment grade. They blame the usual suspects for the poor outlook: sagging US sales, high fuel costs and rising manufacturing costs– all while Ford and GM seek to restructure. Fitch says the negative outlook on the two companies will persist until either the US economy improves or the firms prove to investors that their cash flow position has improved significantly (Fitch would not comment on a scenario involving Hell freezing over). Of the two, Fitch is more bullish on Ford. "In light of Ford's progress on its restructuring program and its product profile, it may achieve (positive cash flow) before the end of this year." But "liquidity drains at GM this year may result in its rating being downgraded further." Folks, we're talking an $8b '08 cash burn. That is one serious ouchie.

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  • NeonCat93 NeonCat93 on May 08, 2008

    @ menno I guess it depends on what exactly the $1.98 gets you. If you could lay everybody off then use the machines to build a robot army to take over the world, that would be worth at least $2.00. Or the stationary. Someone has to want all the stationary. Heck, the best price I can pay for copy paper is about $28/case. One case of paper means I make $26 profit. OTOH, I probably couldn't afford the property taxes. Dang it, foiled again. Unless the robot army was ready in time…

  • on May 08, 2008

    Good to see that the company that actually appears to be trying to change (Ford) is being recognized by soembody as a better bet to survive into the future. How much did Mullaly make compared to Waggoner last year?

  • Redbarchetta Redbarchetta on May 08, 2008

    I would take Saab for $1.98 but what would I be getting for my 2 dollars. Is there any engineering and design left in Sweden or did GM kill it all except for a few concept builders. Depending on what would be left to work with of Saab I think it can be salvaged with the right kind of dedicated non-GM management and a little investment. They just need to have one really great 900 hatchback replacement and just forget the rest of the stuff they are peddling.

  • MikeInCanada MikeInCanada on May 08, 2008

    I would definitely buy Saab for $1.98 (plus liabilities....I'll pay, I'll pay, I promise...) just so I can move to Sweden and be surrounded by good looking co-workers.