GM Down to its Last 34 Billion Dollars

http://www.thetruthaboutcars.com/gm-down-to-its-last-34b/

In his first conference call with automotive (http://www.thetruthaboutcars.com/gm-down-to-its-last-34b/#) analysts, freshly-minted GM CFO Ray Young said that his employer has $27.3b in cash and $7b in undrawn credit lines upon which to draw. Although that ain't hay, subtract the $10b GM needs to keep the lights on, consider the company's ongoing cash conflagration, factor in declining sales and the American Axle strike's effect on cash flow, remember that GM lost $10.6b in 2005, keep in mind that GM's already sold the family silver and… the automaker's liquidity isn't quite so reassuring. But don't take my word for it. "As CFO, my priority is making sure this place is funded," Young said. "While we believe the industry (in U.S. sales) will be in the low 16 million units, we have triggered actions right now to make sure we start to conserve liquidity." Automotive News (http://www.autonews.com/apps/pbcs.dll/article?AID=/20080321/ANA02/131405067/1142) [sub] reports that GM's Beancounter-in-Chief revealed that GM is postponing [unspecified] non-product related capital expenditures from the first half of '08 to the latter half of the year– and beyond. "If the market doesn't return, we will defer that further into the future," Young said. GM's CFO said the suits are now running the business on a "quarter-to-quarter" basis. Oh, and Young said that GM ran about 940k units of dealer stock the end of February, roughly 125k units below the level at this point last year.

i pray they dont tank before the camaro comes out

TCC is just about the worst source for anything worth reading on the web.

Ignore them.

The whole story hinges on a seriously flawed assumption that the situation is static. However GM has a multitude of options, and there are a lot of variables in the world auto markets as well, that could affect things involved.

Why didnt they wait til Q1 08 numbers come out and then attack this.... scenario?

TCC is just about the worst source for anything worth reading on the web.

Ignore them.

It's from "The Truth About Cars," not "The Car Connection." Unless they are associated somehow?

"The Truth About Cars" is pretty much garbage.

FWIW

They have certain people on their staff that hate GM with a passion and they usually push the agenda of GM failure pretty hard.

I read an article on the truth about cars where they talked about the gmc acadia. They really only pointed out what they considered flaws, which weren't many (they didn't like the glide rails).

Then, they compare the mileage against a Rav4. They are pretty one sided, and the side is anti GM.

EDIT: Here is the article I mentioned.
http://www.thetruthaboutcars.com/2008-gmc-acadia-review/

GM Down to its Last 34 Billion Dollars


Me too.... :(































:p

It's from "The Truth About Cars," not "The Car Connection." Unless they are associated somehow?


Sorry, TTAC was what I meant to type. My apologies to TCC, which I have no opinion of.

The whole story hinges on a seriously flawed assumption that the situation is static.

GM would be better off if the situation were static, because every day that passes means another day of cash burned.

What's funny is that everyone here wants to attack the credibility of the source, when what's being reported here are numbers and the words of GM's CFO. Seems to me that folks here just don't like the bias of the facts.

Check out GM's balance sheet (http://finance.yahoo.com/q/bs?s=GM) - for the currently-displayed periods (31-Mar-07 through 31-Dec-07), damn near everything is trending in the wrong direction.

spot on dude its the CFO of the company saying that and not the website

The bad thing about this situation is that GM is out of assets to sell in order to raise cash. GM used to have some measure of diversification, but over the last 10 or so years has sold off pretty much all of their non-core assets: Hughes, EDS, DirecTV, Allison Transmission, half of GMAC, GM Defense, medium-duty trucks. There's nothing left to sell. If they hit another rough spot their only option could be to mortgage their factories like Ford had to do. But the last thing their balance sheet needs now is more debt.

What's really sad is that most of those units that GM sold were fairly reliable profit and cash-flow generators. Meanwhile the core automotive business has lost money in most years. To make matters worse, GM took some of the money raised by selling profitable divisions and invested in even more money losing car companies like Saab and Fiat. So rather than have a balance to the cyclical and uncertain automotive business, GM leverages itself even further into the business where they haven't figured out how to reliably make money.

they can still sell saturn :)

but they really gotta start closing dealers down because i believe they have around 5,000 dealers in the US alone

given that the majority of US vehicles are drastically overpriced...

I would NEVER buy an asian car. I live in Detroit.. it's probably just how I was brought up. I blame the hippies in california. Et's.. not MPG's.

Oh no! Our very last $34 billion! Why, that's dwindled down from the $20, billion we had two years ago! Oh, wait...

GM has MORE liquidity now than they did a few years ago. The GMAC sale accounts for only $1.4 billion of that, if I understand correctly. Add to that the significantly reduced employee obligations thanks to the new UAW contract, and the company's balance sheet looks as healthy as you might expect for a company in the middle of a turnaround. The CFO's concerns are no different, I'd wager, from the worries being raised in every company in nearly every industry right now. They are worried about a recession.

What bothers me about Robert Farago and TTAC is how much of a one dimensional story this has become for him. He's become so attached to the story of GM's bankruptcy that he's continuing to follow it regardless of context. I am a journalist, and can tell you for a fact that this happens to journalists. They invest their time and effort into a story, and cannot concede that there might not be as much there as they originally thought.

GM sold 51% of GMAC to Cerberus for more than Cerberus paid for 81% of Chrysler. I'm not sure, but I think it was $11.4 billion.

... the company's balance sheet looks as healthy as you might expect for a company in the middle of a turnaround.


I'd love to see an assessment by an accountant or evidence of similar balance sheets for other companies that have successfully turned themselves around. Put another way - I really, really disagree with your statement. I'm unaware of a healthy company that has a negative shareholder equity.


The CFO's concerns are no different, I'd wager, from the worries being raised in every company in nearly every industry right now. They are worried about a recession.


There's a big difference between concern for the economy, and worries about cash flow. Investing into a downturn is often the wisest way to deal with slowing sales; GM is doing exactly the opposite, because they can't afford to invest into new products.

You speak of journalistic bias; I think you need to set aside yours and look at the numbers. It's possible to put a positive spin on many of GM's recent actions, but man, their financials are scary!