Bailout Watch 180: Wall Street Waiting For "Urgent" GM Bailout

Edward Niedermeyer
by Edward Niedermeyer
bailout watch 180 wall street waiting for urgent gm bailout

In a new report covered by Automotive News [sub], Goldman Sachs says GM will end the year with $12.5 billion in cash, and will need at least $22b in government money to survive. Goldman is suspending GM’s rating, putting the automaker on a “wait-and-see” basis until further bailout details emerge. Meanwhile, JP Morgan cut its GM rating to “neutral” from “overweight” saying the automaker needs “something immediately” to make it through the end of the year. Morgan also slashed GM’s stock price target, from $3.08 to $1.84, about a dollar off its trading price of $2.89 at the time of this writing. And while Goldman set the bailout minimum at $22b, Morgan reckons the bill for righting the General “could easily reach $30 billion unless GM reforms its vast liability structure.” GM stock is currently down about five percent on the day, although it’s shown resiliance to earlier Deutsche Bank analysis which valued the stock at precisely bupkis. Still, urgency is the common thread that ties all the analysis together, and if news doesn’t improve soon for GM, its stockholders could see their paper become worthless in short order. Rest assured, TTAC will have the latest developments as they occur.

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  • Snabster Snabster on Nov 13, 2008

    "Set the individual a profitable protions free from the boat anchor and they will start to kick ass again." That worked really well for Lehman Brothers too. And exactly how many billions did GS and Morgan Stanley get.... oh, but that is different.

  • Npbheights Npbheights on Nov 13, 2008

    Redbarchetta: a Company that only made engines, a true "General Motors" would only make sense if there are cars and trucks to put them in. If nobody made GM cars and trucks, all that would be left would be the current GM fleet on the road, many of which would be worth so little if the parent company went away that they would not be worth putting new motors in anyway. Every day that passed, there would be fewer of them anyway, so a company that only made GM engines would not have a long term future. The marine market is important but very small. Maybe Mercury marine could pick up one small GM engine plant and tooling at auction and make them for themselves. It is just another aspect to think of as the deck chairs are being rearranged on SS General Motors...

  • Redbarchetta Redbarchetta on Nov 13, 2008

    I think you might have misunderstood me. I wasn't talking about one manufacturing plant I was refering to the powertrain division and mostly V8 and V6 manufacturing as a whole. If it were to be bought up at auction as a whole unit for just s few billion it would be profitable easy. Even if GM were to be liquidated tomorrow the parts of it would not vanish off the face of the earth. The truck division would live on under some other owner, Chevy would continue, Holden ect. The parts left will need engines whether they own the engine division or not. And there is no reason to think that on the open market that other automakers wouldn't want V8's and V6's, GM makes some damn good V8's and some pretty competetive V6's. Who is to say TaTa or the Chinese wont want to just buy them to dump into their trucks and SUV's. Look at Yamaha they have an entire engine R&D department that just about anyone can buy from. The parts do not have to be connected to the whole to be successful.

  • GenXexec GenXexec on Nov 13, 2008

    "Anyone got any clue about how many GM vehicles (read: SUV’s and pickups) are being turned in off of lease (read: huge money hemmorhages) over the next six weeks?" Not sure how many are coming up overall, but I can tell you mine is coming up at the end of December. 2005 Yukon XL 6.1L 3/4 ton w/4 wheel steering. They want just over $25k for it or I can turn it in and walk away - no negotiation on the price - just $25k or walk way. KBB puts it's current value around $16k - I think you all know my answer on this one.