gavriil

Kirk Kerkorian to bid for 28 million GM shares - - Reuters / May 04, 2005 - - Source: Automotive News

gavriil

I am missing for two days and no one has posted about this. What's the matter with you all?

gavriil

GMAC could be Kerkorian's real target, analysts say - - By Dave Guilford - - Source: Automotive News

SpeedyV6

Hopefully GM won't fight him if he tries to install his own representative on the board of directors the way Chrysler did.

gavriil

Oh I dont think so. I think this is very well orchestrated with the current GM exec team and at least some of the board. Kirk is coming in so that the Union receives more pressure. GM is doing this to themselves right now and it's a very smart move. Let's see what happens.

SpeedyV6

Kerkorian Move
On GM Stock
Stirs Up Market
Seeking to Boost Stake
To 9%, Deal Maker Raises
Specter of Chrysler Raid

By LEE HAWKINS JR. and MERISSA MARR
Staff Reporters of THE WALL STREET JOURNAL
May 5, 2005; Page A1

Billionaire investor Kirk Kerkorian, who once led a hostile takeover bid at Chrysler Corp. and has spent decades making deals in Hollywood and Las Vegas, yesterday jolted Wall Street by placing a big bet on a turnaround at the world's largest auto maker.

Mr. Kerkorian's investment company, Tracinda Corp., said yesterday it will offer about $868 million, or $31 a share, for 28 million shares of General Motors Corp., or nearly 5% of the total shares outstanding. The tender offer to GM shareholders values its common stock outstanding at about $17.5 billion. Tracinda said it already owns 22 million GM shares, or 3.9% of the shares outstanding, purchased at an average of $26.33 a share.

If Tracinda gets the block it is seeking, Mr. Kerkorian's company will become GM's third-largest shareholder, with a stake of 8.84%, behind a unit of State Street Bank & Trust Co., with 17.65%, and Capital Research & Management Co., with 11.46%.

Tracinda's disclosure sent GM's beaten-down shares soaring yesterday to $32.80, up 18%, or $5.03, as of 4 p.m. composite trading on the New York Stock Exchange. Investors wagered that Mr. Kerkorian, 87 years old, will push for faster action by GM management to rebuild profitability, or that others will follow Mr. Kerkorian into GM's shares.

"Either Kerkorian is going to push through change or in order to keep him away, GM is going to make changes," said corporate-governance expert Nell Minow.

GM Chairman and Chief Executive Rick Wagoner has come under growing pressure as the company has reported a $1.1 billion first-quarter loss, suspended its earnings guidance for this year, and struggled to reverse slumping sales and market share in North America, GM's biggest market.

An adviser to Mr. Kerkorian described Tracinda's GM stock purchases as a "passive investment," saying Mr. Kerkorian has confidence in GM's current strategy and management. "We do not have an agenda that we want to give to the company," said Terry Christensen, an attorney and a spokesman for Tracinda. "He feels that the company has great value and over time, it will be a great investment. The stock is at historic lows, and in the automobile industry, that happens. He wants to take advantage of that, and invest in the company."

GM spokeswoman Toni Simonetti said, "GM typically does not express a view on specific investor activity," adding: "GM's board and management are committed to enhancing shareholder value for all of our investors."

Mr. Christensen said Mr. Kerkorian is a "patient investor" who plans to hold GM stock "for a while." But the octogenarian Mr. Kerkorian, who made his reputation as a deal maker in Hollywood and Las Vegas, has demonstrated in the past that he won't shy from a confrontation.

In 1990, in the depths of Detroit's last major recession, Mr. Kerkorian bought a 9.8% stake in then-struggling Chrysler Corp. Four years later, with Chrysler sitting on some $6.6 billion in cash, Mr. Kerkorian demanded that the company pay some of that cash back to shareholders, and began buying additional shares. A few months later, he launched a hostile takeover bid that had the support of former Chrysler chief Lee Iacocca, but it fizzled.

Thomas T. Stallkamp, who was a top executive at Chrysler when Mr. Kerkorian tried to take over the company, said the bid to purchase more GM shares represents a serious issue for GM's management. Chrysler's 1995 takeover battle with Mr. Kerkorian became a considerable distraction for the company's executives, Mr. Stallkamp said. Later, however, once Mr. Kerkorian had a seat on the Chrysler board, executives other than CEO Robert Eaton rarely saw or heard from him.

Mr. Kerkorian then hired Jerome B. York, Chrysler's former chief financial officer, and pushed to have Mr. York take a seat on the car maker's board. In the end, the two sides arranged a truce. Mr. Kerkorian agreed not to attempt a takeover for five years, and Chrysler gave him the seat on the board, although it was to be occupied by a Kerkorian representative other than Mr. York.

Before the truce ran out, Chrysler management agreed to merge the company with Germany's Daimler-Benz AG. Mr. Kerkorian made billions on the deal, but later sued the new company, DaimlerChrysler AG, and its chief executive, Jürgen Schrempp, in U.S. federal court. He alleged that Mr. Schrempp misled shareholders by saying it would be a "merger of equals" while all along planning to have the German company take over Chrysler. The court dismissed the suit last month, although Mr. Kerkorian has said he will appeal the decision.

GM now finds itself in a situation roughly analogous to Chrysler's in 1990, although GM is far larger and has more cash on hand. Still, along with its $1.1 billion first-quarter loss, its debt is teetering on the brink of a downgrade to junk-bond rating levels.

Analysts speculated that Mr. Kerkorian's presence as a major GM shareholder could turn up the heat on Mr. Wagoner to launch a more aggressive, far-reaching overhaul than he has outlined to date.

"The pressure is continuing to build," said Pat McGurn, executive vice president and special counsel to Institutional Shareholder Services. "If this management team does not have the confidence of Tracinda and Kirk Kerkorian, he's not going to hesitate to make his views known to the marketplace, to the board of directors, and to other shareholders."

One focus of interest among investors and analysts is General Motors Acceptance Corp., GM's highly profitable financing arm. GM currently has a market capitalization of about $16 billion, but analysts put the value of GMAC at more than $20 billion on its own. The company, which sells mortgages and insurance, and provides financing in the sale of GM vehicles, is rated at the same level as GM -- one notch above junk level -- by Standard & Poor's and some other major debt-rating agencies. Freed from GM, it's likely GMAC would have a much higher rating, and better access to capital for growth.

"He could force the sale of GMAC, which could unlock significant value," said Himanshu Patel, an analyst with J.P. Morgan. Mr. Patel said that a partial sale of GMAC could benefit shareholders and improve GMAC's profitability by helping it obtain greater access to credit as more of an independent company with some ties to GM.

Mr. Kerkorian's GM stock buy also puts a new factor into the complex equation of GM's relationship with its largest union, the United Auto Workers. For years, GM management strategy for the company's North American operations has been driven largely by the demands of the UAW contract, which obliges GM to guarantee as much as 95% of full-time pay for laid-off UAW workers and blocks permanent plant shutdowns. In addition, GM's pension and health-care obligations to UAW workers force the company to produce even vehicles for which demand is relatively weak.

GM management and the UAW are now in the middle of discussions about how the two sides can reduce GM's $5.6 billion-a-year health-care bill. UAW officials have said they have no plans to reopen the three-year contract, but said they would instead work to find possible cost reductions within the confines of the existing agreement.

The move by Mr. Kerkorian "could force them [GM] to start playing hardball with the UAW," Mr. Patel said.

In the case of Chrysler, Mr. Kerkorian urged the company repeatedly to use its large cash reserves to pay a premium to investors. Including the cash holdings of GM and GMAC and about $20 billion in funds set aside for health-care obligations, GM has between $20 billion and $60 billion in cash. If that status changes, GM's financial picture will look much worse, analysts said.

"Spinning GMAC out of GM is like taking the engines off a jet plane in mid-flight," said Ron Tadross, an auto analyst with Banc of America Securities. "GM would survive for a while, but it would be hard to survive without GMAC."

Brett Hoselton, an analyst at KeyBanc Capital, said Mr. Kerkorian's presence could give the union a firsthand view of accountability GM has to its board and major shareholders. "You could now argue that now Kerkorian is the real villain and not GM management to the UAW," Mr. Hoselton said.

In Hollywood, he has come to be known for his focus on the deal and his lack of interest in the creative side of the movie business. His ownership of Metro-Goldwyn-Mayer Inc. saw the studio dramatically scale back its production of movies and focus almost entirely on milking its back catalogue of movie and television titles. He has made a small fortune from buying MGM three times in the past four decades, only to sell it each time.

In Las Vegas, Mr. Kerkorian has methodically bought and sold land and properties since his first investment there in 1955. He has gone head-to-head with Las Vegas heavyweights like Howard Hughes. One of the original Las Vegas moguls, Mr. Kerkorian became acquainted with the city and its characters while operating a charter-plane business that ferried gamblers, celebrities and businessmen to the desert city from Los Angeles -- often piloting the planes himself.

At 87, Mr. Kerkorian is extremely fit both mentally and physically, and still plays tennis regularly with a small group of close friends. Drawing on his ancestry of long-lived Armenians, Mr. Kerkorian believes he has many years left in him, one person said.

---- Peter Sanders contributed to this article.

Write to Lee Hawkins Jr. at lee.hawkins@wsj.com5 and Merissa Marr at merissa.marr@wsj.com6
URL for this article:
http://online.wsj.com/article/0,,SB1...024408,00.html

Yumcha

Cuz, maybe we don't give a fark about GM?





Now, if it was news about a new Acura coupe...

cM3go

I should have bough GM shares

kansaiwalker1

We are all spoiled now so we assume you are going to post it!



Looks like the vultures have started circling around GM....

SpeedyV6

Why? They'll only get cheaper as bankruptcy draws near. The bonds will be where the action is. At least bondholders will get some thing once the bankruptcy reorg is over.

cM3go

Did you read the article?

gavriil

No you shouldnt have. There is potential for a lot more downside in my opinion. Be patient. You will see 20s once again for sure.

phipark

My shares have gone to shit. I wish GM wouldn't make me buy their stock.

gavriil

I can see GM at 25 in the near to mid term. Maybe lower. But for someone who is really interested I'd buy in 3 or 4 installements. Maybe once when it's at very high 20s, then go from there. You can never find the bottom.

gavriil

Kerkorian still committed to raising stake in GM - - Reuters / May 05, 2005 - - Source: Automotive News

cM3go

for a quick gain i could have, sold them once they hit the peak

SpeedyV6

Monday, May 9, 2005


Kerkorian's Cudgel

What the billionaire will do to make his huge bet on General Motors pay off
By JAY PALMER

KIRK KERKORIAN COULD TURN OUT to be either the best thing or the worst thing that ever happened to General Motors chief Rick Wagoner. And either way, investors could win. The 87-year-old billionaire, who last week said he would accumulate a nearly 9% stake in the ailing car maker, probably will take a passive role initially; he'll wait and see if Wagoner & Co. can pull off a turnound themselves. Kerkorian's mere presence could help make that happen, providing Wagoner with a cudgel to use in forcing change from dealers, suppliers, workers, retirees, mid-level managers and even politicians. "If you don't act," Wagoner could say, "You-Know-Who will do it himself."

And indeed, Kerkorian is unlikely to wait long for improvement. In the 1990s, after taking a 10% stake in Chrysler, he waited five years before pushing for control. But, as he approaches 90, he may not be as patient this time around. Nor is he likely to reach quite as far: "He doesn't want to own GM, just make some money," says Steve Girsky, an analyst at Morgan Stanley.

To that end, Kerkorian will have plenty of options at his disposal. He could use his influence -- and perhaps mobilize other big shareholders -- to force a distribution to stockholders of GM's cash hoard of about $18 billion. He could press Wagoner to wring excess production capacity from the company. And if that doesn't work, he could call for Wagoner's head.

Some are speculating that Kerkorian will push for GM to spin off or sell its lucrative GMAC finance unit. That, however, remains highly unlikely since GM without GMAC to finance its car sales would become an instant basket case, and Kerkorian knows it. Such a sale would markedly increase the odds that GM would have to seek bankruptcy protection, a move that would wipe out the value of Kerkorian's stake. A more likely step for GM: selling a minority interest in GMAC, to raise cash and distance the finance company from the parent's woes.


Kirk Kerkorian


The Kerkorian chapter of GM's storied history started to unfold Tuesday when the investor announced that his company, Tracinda, had bought 3.9% of the Detroit auto giant and plans a $868 million tender offer to buy a further 4.9% at $31 a share, a 13% premium over what was then the market price.

That news, combined with heavy stock purchases by short sellers covering their positions, forced a blast of fresh air into the company's sagging shares (ticker: GM). They had been on a losing streak for years, reflecting both the company's lagging share of the U.S. car and truck market and the huge burden of its retiree health costs.

On Wednesday, the share price jumped from 28 to 33, only to then have a bogey man walk in and spoil the fun the next day. Standard & Poor's became the first major agency to downgrade the credit ratings of GM and Ford Motor (F) to "junk" status -- a move fraught with symbolism about these American business icons. More substantively, the non-investment-grade ratings make funding their vital finance operations more expensive. The stock closed the week at about 30.

A big bet on a turnaround at GM is right up Kerkorian's street. He has a winning history as a deal maker, buying and selling airlines, casinos and movie studios (MGM three times). His Chrysler stake, which he established in 1990, eventually delivered him a whopping paper profit of $4.8 billion when Daimler made its takeover bid.

Clearly there is similar recovery potential at GM, if only because it is in such deep trouble. As 19th century German banker Nathan Rothschild famously told investors, the best time to buy is when "blood is running in the streets."


The metaphorical red blood -- to say nothing of the very real red ink -- is running at deep at General Motors right now. As Barron's has noted in previous stories ("GM's Challenge1," Feb. 28, and "What GM Must Do2," March 21), the company faces essentially two problems: weak revenues and high costs.

Though still the world's largest auto maker, GM is on a 30-year long losing sales streak that cut the company's share of the U.S. car market to 25% last year, down from 28% in 2003. And that despite huge customer price incentives as high as $5,000. Its latest new offerings, most notably the Pontiac G6 and Buick LaCrosse and Chevrolet Cobalt, have not been hot sellers, and few outsiders see evidence that the declining sales trend can be quickly reversed, a factor in the stock's trading down ahead of last week to a new 12-year low.

Now, with top rivals like Toyota, Nissan and Hyundai moving into GM's once-profitable home market for trucks and sport-utility vehicles, the picture becomes even darker. Essentially, GM has just too many plants, too many workers and too many brands (Cadillac, Hummer, Buick, Pontiac, GMC truck, Chevrolet, Saturn and Saab) for its declining sales.

The irony is that a decade of boosting productivity and cutting waste has made GM the leanest and most efficient U.S. car maker. But that hasn't been enough to offset some serious disadvantages, far and away the biggest of which is the very high cost of the company's "legacy costs," primarily pension and health care.

Pension costs, for years GM's biggest burden, have been brought under control by GM pouring billions into the retirement plans. But the same can't be said for health care for the firm's 184,000 union workers and 680,000 retirees and defendants.

Table: GM's Biggest Shareholders3



These remain one of the biggest items in GM spending, totaling an estimated $5.6 billion this year, and the number is predicted to rise at a double-digit annual pace for much of the next decade. That's a burden that increases GM's cost -- or decreases its profit -- by over $1,500 a vehicle.

All this came to a head in March when, after months of maintaining a brave front, GM finally bowed to reality and slashed its earnings estimates for the first quarter and year. Just weeks later, the auto giant reported numbers even worse than forecast, a $1.1 billion three-month loss, its biggest quarterly deficit in over a decade. For the year, the Street is looking for earnings around eight cents a share, down from $6.40 last year, a target that also might not be met. The only real profit center at GM current is the company's finance subsidiary, GMAC, which has been doing a roaring trade in mortgages, car loans, insurance and commercial loans.

Now that Kerkorian has arrived on the scene, Wagoner, 52, is under more pressure than ever to lay out a clear comeback plan. He has pointedly refused to that so far. As of now, the $2 annual dividend has not been cut, no announcement has been made of sweeping mandatory reductions in senior management salaries and benefits, and there has been no reported move by GM to seek financial aid and concessions from its network of 7,600-odd dealers and its suppliers. Though vague hints that GM is holding ongoing secret talks with the UAW about health care have surfaced, these haven't been confirmed by either side.

Wagoner may have little choice but to start shedding light on all this on June 7, when GM holds its annual meeting for shareholders, in Wilmington, Del.

Kerkorian has yet to articulate his own plans, but a spokesman for Tracinda last week insisted that the stock purchase was a "passive investment." He added that Kerkorian "did not have an agenda for GM...[but simply] feels the company has great value over time." That may be exactly right.

"My best guess is that we should take the 'passive investor' protestations at face value," says Scott Merlis, an auto analyst with Thomas Weisel Partners. "What really intrigues me are the tactics he is using. Why did he make a public announcement when he could have just bought the stock quietly? I don't have an answer, but it could be a deliberate shot across GM bows, a warning to get the recovery moving -- or else."

Merlis pointed out what, in the short term at least, could be the best news for investors: "Whatever else is going on, Kerkorian's deal puts a floor under GM's stock," he says.

Even if he is "passive," Kerkorian's mere presence ramps up the pressure. For GM holders, who've seen their shares' value shrink by more than two-thirds since 2000, a floor is a comforting thing indeed. And with Kerkorian in the room, it might just be time to start looking at the ceiling again.


--------------------------------------------------------------------------------

E-mail comments to editors@barrons.com4

URL for this article:
http://online.barrons.com/article/SB...825527342.html

Fibonacci

GM: Kirk Could Be on to Something
Both Ford and GM had their credit rating downgraded, but a smoother road lies ahead for GM—which may be why Kerkorian upped his stake.
FORTUNE
Monday, May 16, 2005
By Alex Taylor III


In the eyes of the public, General Motors and Ford have been joined at the hip for decades as Rustbelt manufacturers of traditional Detroit iron. So when Standard & Poor's downgraded each of their credit ratings to junk status on the very same day, it reinforced the idea that both companies are struggling against superior competition with an outdated business model.

A closer look, however, shows that the outlook for the two companies is split. And it's GM rather than Ford that's looking stronger—a fact undoubtedly not lost on Kirk Kerkorian, who has decided to up his stake to 8.8% of GM.

Everybody knows GM's woes by now: falling market share, slumping SUV sales, mediocre models, spiraling health-care costs, negative cash flow. Its North American operations performed so badly this year that CEO Rick Wagoner moved two executives aside and placed himself in charge.

But GM may be putting the worst behind it. On the cost side, the company is riding the attrition curve. Its U.S. hourly payrolls shrank from $9.1 billion in 2002 to $8.7 billion last year. It expects to see the ranks of hourly retirees and surviving spouses start declining in 2008. Pressure is building for the UAW to replace its gold-plated benefits with some merely bronze-coated.

GM is starting to look healthier on the revenue side too. Industry sales picked up in April; meanwhile GM is combining its ailing Buick brand in the same dealerships as Pontiac and GMC, which should spark interest in both. Finally, coming later this year are some of GM's splashiest new cars since the 1959 Cadillac Eldorado Biarritz. The retro-styled Chevy HHR and slinky Pontiac Solstice have the best shot at luring customers into showrooms, while the Chevy Impala and Buick Lucerne should build sales in the giant mid-priced sedan segment. "The last batch of new models from GM landed with a thud, but the new entries look better," says marketing analyst George Peterson of AutoPacific.

Kerkorian isn't expected to call Wagoner every day with advice on how to run the company. But the 87-year-old investor hired highly regarded ex-Chrysler and IBM executive Jerry York as an advisor, effectively guaranteeing that he will use his stake to prod GM to change. According to Kerkorian's attorney and spokesman, Terry Christensen, he "sees a company with very strong assets, a global reach, a historic cash flow that is very strong, and a lot of cash on hand that can be used to solve problems." And Kerkorian doesn't have to look hard to find some noncore GM assets that can be sold—including GMAC's mortgage and insurance business and minority holdings in three Japanese automakers.

Kerkorian didn't, however, have any interest in Ford. The founding family still controls 40% of the shareholder votes, and there's also less upside. With little in its pipeline, Ford will find it tough to repeat the success it has had this year with the Mustang. Prudential analyst Mike Bruynesteyn calculates that Ford will renew only 19% of its sales volume in 2006, vs. 33% for its competitors. (Ford disputes his but won't provide its own figures.) Bruynesteyn expects GM's earnings to more than quadruple next year while Ford's go up only a fraction. Chairman Bill Ford may have had that in mind when he announced at the annual meeting in May that he won't take a salary or bonus until profits recover. Investors choosing between the two may recall the old joke about two hunters who stumble on a bear. As one hunter puts it, "I feel safe because I don't have to outrun the bear; I just have to outrun you."

http://www.fortune.com/fortune/subs/...061453,00.html

Moog-Type-S

Am I the only one who thought this thread title read:

"Kirk Could Be on Something"????


...it made sense to me.

gavriil

GM board stands neutral on Kerkorian bid to purchase shares - - By JASON STEIN | Automotive News - - Source: Autoweek

Fibonacci

GM's Devine Prevents Bankruptcy by Seeking Cash, Cheaper Loans
2005-05-22 23:59 (New York)


(Published in Bloomberg Markets magazine.)

By John Lippert
May 23 (Bloomberg) -- The 700 General Motors Corp. officials
who gathered in the beige ballroom of the Hyatt Regency Hotel in
Dearborn, Michigan, on April 14 expected to hear a warning shot
from GM's top management -- and that's exactly what John Devine,
the chief financial officer, delivered.
GM is just as vulnerable to economic upheaval as the U.S.
airlines and steelmakers that have already declared bankruptcy,
Devine said. ``Time is not on our side,'' he said. ``The longer
we wait to address our cost structure, the more painful the
solutions will be.''
It was one of dozens of ringing statements that Devine
issued in recent months as the company hovered on the edge of
financial crisis. The final push may have come on May 5, when
Standard & Poor's slashed GM's debt to high-yield, or junk,
status.
The downgrade came after Detroit-based GM announced a $1.1
billion loss in the first quarter of 2005 compared with net
income of $1.28 billion a year earlier, as sales fell 4.3 percent
to $45.8 billion. The company's U.S. sales fell 4.9 percent in
the first four months of 2005, while rival Toyota Motor Corp.'s
rose 13.6 percent.
GM shares sold for $32.98 on May 20, down 18 percent for the
year. ``I've been short on GM shares for about a year, and I'm
making a lot of money,'' says James Melcher, president of
investment management at Balestra Capital Ltd. in New York.

Shares Sold Short

Fourteen percent of GM's shares were sold short, or borrowed
and sold in order to profit from falling prices, as of April 26.
The figure was the sixth largest among companies in the S&P 500
Index.
On May 4, Devine returned a call to GM from Jerome York, an
adviser to billionaire Kirk Kerkorian, who tried to take Chrysler
Corp. private a decade ago. York told Devine that Kerkorian's
Tracinda Corp. would offer $868 million for as many as 28 million
GM shares.
If successful, the bid would more than double Kerkorian's
previously undisclosed stake to 8.8 percent, or 50 million
shares. GM shares rose $5.03, or 18 percent, to $32.80 on the day
Kerkorian's intentions were disclosed.
S&P cut the bond ratings on GM and its finance company,
General Motors Acceptance Corp., two levels to BB, making the
world's largest automaker by sales the biggest-ever company to
have its debt rated as junk.

Third-Largest Automaker

S&P also rated Ford Motor Co. bonds as junk, lowering debt
from the world's third-largest automaker by sales one level to
BB+.
Fitch Ratings and Moody's Investors Service have negative
outlooks on GM, which means their ratings are more likely to fall
than rise. Fitch cut the company's rating to its lowest
investment-grade level in March, and Moody's dropped the
automaker to that level on April 5.
The spread on GM's 8.375 percent bond maturing in 2033 was
690 basis points more than comparable U.S. Treasuries on May 20,
according to Trace, the bond-price-reporting system of the NASD,
formerly the National Association of Securities Dealers.
Yield spreads for junk bonds in general were about 417 basis
points, according to Merrill Lynch & Co. (A basis point is 0.01
percentage point.)
Devine, 61, who arrived at GM as CFO in 2001, has found
himself at the white-hot center of this financial firestorm. He
got there after losing a duel with Jacques Nasser for the chief
executive officer job at Ford in 1998.

Internet Startups

Upon leaving Ford, he spent two years wandering in the
wilderness of Internet startups. Now, says Eugene Jennings, a
business professor emeritus at Michigan State University in East
Lansing, he may be in line for the chairman's job if GM's
directors decide that Rick Wagoner, 52, isn't reviving the
company fast enough. Wagoner is now both chairman and CEO.
``John's a very competent person,'' says Allan Gilmour, 70,
who retired as Ford's vice chairman in February. ``Speaking
selfishly, I can say I wish General Motors had somebody who would
be weaker.''
Since 2001, Devine has more than doubled to $168.4 billion
the cash and credit that GM and GMAC can spend to close factories
or operate during a sales slump. He braced for the lowering to
junk status of GM's $196 billion in unsecured debt by developing
cheaper sources of funding, including bonds that use car loans as
collateral.
``John's given General Motors a massive amount of breathing
room at a time when its operating results will remain poor for
quite awhile,'' says John Casesa, a Merrill Lynch auto analyst in
New York. ``If he hadn't, I don't know where the company would be
today.''

`Like an Earthquake'

GM's woes, meanwhile, are reverberating around the world.
The company's March 16 forecast of a first-quarter loss sent
investors scurrying for the safety of U.S. Treasury bonds and
pulled down stock prices in the U.S. and overseas.
``This has been like an earthquake,'' Mohamed El-Erian, who
manages $20 billion of developing-nation debt at Newport Beach,
California-based Pacific Investment Management Co., told
Bloomberg Television on April 19. Amid the confusion, El-Erian
started buying bonds in Brazil, Ecuador, Panama, Peru, Russia and
Ukraine, where he felt underlying economic strength had been
overshadowed by GM's woes.
Scott Colbert, who helps manage $7 billion, including GM
bonds at Commerce Bank in St. Louis, says he expects a similar
opportunity in the wake of the GM downgrade.
After the company's March 16 profit warning, he sold GM
bonds maturing in 2009 and replaced them with bonds maturing in
2006.

Spread Surge

The shorter maturities helped protect him from a surge in
the spread on GM bonds above comparable Treasuries after the
downgrade, which may help force many mutual funds to sell GM
bonds rated as junk.
The spread on GM's 8.375 percent bond maturing in 2033 rose
74 basis points on May 5, the day of the downgrade.
``At some point, several weeks after the downgrade, you'll
see the credits snap back, and that would be a heck of a buying
opportunity for those who play in the high-yield space,'' Colbert
says.
The bonds will snap back, he says, because Devine's cash and
credit hoard allows GM to keep paying yields higher than those of
other companies -- and because Devine's moves have eliminated the
possibility of a bankruptcy during the next 24 months.
Bill Gross, chief investment officer at Pimco and manager of
the world's largest bond fund, agrees. He told Bloomberg
Television on May 3 that even junk-rated GM bonds may attract
buyers. ``If the auto industry survives for at least a few years,
and I suspect it will, then the yield on these securities is
substantially in excess of lesser bargains in the high-yield
environment,'' Gross said.

`Winning Strategy'

S&P did GM a favor by classifying its debt as junk, Colbert
says. ``It will force them to behave as the company they are, not
the company they were,'' he says. ``It will force them to
recognize that being the dominant player on the globe is not
necessarily a winning strategy.''
GM hasn't reduced its size and its costs fast enough as
Toyota and others have gained market share, and it relies too
much on large sport utility vehicles such as the Chevrolet
Suburban, whose sales have been hurt this year by rising gas
prices, Colbert says.
At GM's North American automotive unit, fixed costs for
factories, labor and new products amounted to 39 percent of sales
in the first quarter, according to a global telecast to employees
by Wagoner on April 19. That was 4 percentage points higher than
during the same period in 2003.

Cornerstone

To be competitive, GM would have to cut that percentage to
25, Wagoner told employees. ``I even make John Devine nervous
when I say that,'' he said.
Neither Devine nor Wagoner would comment for this story.
Devine said during a Bloomberg Television interview on April 19
that GM could continue to function as a junk-rated company.
``I wouldn't like to see a downgrade, but if it does happen,
we're not going to have to change our business model,'' he said.
The cornerstone of Devine's plan to keep the company afloat
is a link between GM and GMAC, which as a stand-alone company
would have ranked as the sixth-largest U.S. bank last year. GM
drives customers to its finance unit by absorbing as a marketing
cost the added interest expense of zero percent auto loans
offered by GMAC.
During the first quarter, GMAC wrote loans and leases for 54
percent of GM's 742,000 retail customers in the U.S. In return,
GMAC expects to pay the automaker a dividend in excess of $2
billion during 2005, Sanjiv Khattri, the unit's CFO, told
investors in Amsterdam on April 26.

Loans and Leases

When it was created in 1919, GMAC could raise money by
selling unsecured bonds, recycle that money into car loans and
then use the repayments on the loans to pay off the bonds and
book a profit.
Under Devine and GMAC Chairman Eric Feldstein, 45, the
finance unit has become a more-complicated financial dynamo. To
make sure its bills get paid, Devine maintains $18.5 billion in
cash and marketable securities at GMAC.
During 2005, he has said, he expects to collect $77 billion
from people for whom GMAC has written car loans, mortgages and
insurance policies -- and to pay back $63 billion to the unit's
creditors.
GMAC raised 32 percent of its funds by selling unsecured
bonds last year, a drop from 65 percent in 2001.

Unsecured Bonds

Asset-backed bonds rose to 33 percent from 21 percent, and
the outright sale of auto loans to banks rose to 13 percent of
GMAC funding from none in 2001. These so-called whole-loan sales
totaled $6 billion last year, and GMAC plans to sell
significantly more during 2005, Khattri told investors in
Amsterdam.
After making, say, a $25,000 car loan, GMAC bundles the
scheduled repayments with those from thousands of other customers
and sells them to banks such as Bear Stearns Cos. or Citigroup
Inc. It's a process similar to the way mortgage companies sell
home loans to Fannie Mae or Freddie Mac.
GMAC is using the proceeds from the sale of its automotive
assets to expand its mortgage and insurance businesses, Khattri
told investors on April 26. GMAC derived 47 percent of its profit
last year from mortgages, insurance and non-auto assets. That
compares with 23 percent in 2002.
Because asset-backed bonds are guaranteed by loan and lease
payments rather than the issuer's own cash, they have better
credit ratings and require sellers to pay a lower yield. In its
most recent bond sale, in November, GM sold $1.75 billion of 6.75
percent notes maturing in 2014. The yield paid to buyers was 270
basis points more than comparable Treasuries.

Better Credit Ratings

If GM had raised this money through asset-backed securities,
it would have paid about 50 basis points more than Treasuries,
says Karen Weaver, head of asset securitization research at
Deutsche Bank AG in New York.
GMAC is engaged in ``advanced talks'' to sell a stake in its
commercial mortgage unit, GM spokeswoman Toni Simonetti says.
Having outside investors, she says, will help the unit raise
capital without being hampered by GM's junk rating. GMAC tried to
sell the unit two years ago for about $2 billion.
The consortium of buyers with which GMAC is negotiating now
includes Kohlberg Kravis Roberts & Co. and Five Mile Capital
Partners LLC, a person familiar with the situation says.
To protect its residential mortgage business from higher
borrowing costs after a downgrade, GM announced on May 4 that it
had reorganized the unit into a separate holding company called
Residential Capital Corp.

Mortgage, Insurance

In his global telecast in April, Wagoner told GM employees
that a downgrade would make the money that GMAC recycles into car
loans, mortgages and insurance policies more expensive and harder
to get.
``If we have a junk rating for GMAC over a continued period
of time, it's going to put some pressure on their ability to
support auto sales,'' he said. ``Their ability to grow will be
compromised.''
The task of making sure that doesn't happen will fall to
Devine, a Pittsburgh cookie salesman's son who earned a B.A. from
Duquesne University in his hometown and an MBA from the
University of Michigan in Ann Arbor.
He joined Ford's finance department in 1967, and his big
break came in 1988, when Ford CEO Harold Poling named him
president of the automaker's San Francisco-based First Nationwide
Bank unit. He had never worked at a bank in his life.

Postmaster General

Ford had purchased First Nationwide in 1985. Under CEO
Anthony Frank, who later served as postmaster general for
President George H.W. Bush, the company tried to grow by buying
failed savings and loan associations from federal regulators. The
plan backfired when regulators wouldn't let Ford transform First
Nationwide into a commercial bank.
In 1990, Devine had to boost his reserves for problem loans
by $250 million. In 1994, he sold First Nationwide for $1.1
billion to Madison Financial Inc., which was controlled in part
by New York financier Ronald Perelman.
``We could have broken it up and sold it in pieces,'' says
Richard Leweke, a human resources executive under Devine at First
Nationwide. ``That would have produced the best financial result
for Ford, but it would have taken a lot of time and resources and
may not have been in the best interest of our customers and
employees.''
Because of Devine's performance, Ford CEO Alex Trotman named
him the automaker's CFO six months after selling First
Nationwide.

Financial Yardsticks

He made his mark by developing financial yardsticks that
were easy for diverse groups of design, manufacturing and sales
specialists to use when planning a new car, says James Schroer,
then Ford's vice president for global marketing.
Devine's methods for managing the balance among sticker
prices, rebates, subsidized loans, monthly payments and residual
values were so precise that they added a full percentage point to
the company's profit margin, Schroer says. That's a lot in an
industry in which the most profitable of the world's five-biggest
automakers, Nissan Motor Co., reported a 10 percent operating
margin in the fourth quarter of last year.
``John's not a pushover, but he listens to different points
of view before forming an opinion,'' Schroer says. ``With a lot
of these guys, if you don't tell them what they want to hear,
then that's an ugly meeting.''

Management Turmoil

By the late 1990s, Devine had become caught up in Ford's
management turmoil. Trotman, concerned that William Clay Ford
Jr., then 41, lacked operating experience, tried to block him
from becoming chairman. That meant trying to keep Nasser from
getting the CEO job as well because Nasser and Ford were
campaigning for the positions as a team.
Trotman championed Devine for CEO instead, people familiar
with the situation say. Trotman lost out, and Devine announced
his departure from the company five months after Ford became
chairman and Nasser became CEO in 1999.
After leaving Ford, Devine spent a year as chairman of Fluid
Ventures LLC, a San Francisco-based company that offered venture
capital, real estate and management consulting to dot-com
startups. The company started to collapse along with the Nasdaq
Composite Index in 2000.
``John found himself managing a group of very bright,
talented and technically oriented people who were somewhat
undisciplined in a corporate sense,'' says Leweke, who's now vice
chairman of Providian Financial Corp. and who saw Devine socially
during that period. ``He found it interesting but bizarre.''

Popular on Wall Street

During his time at Ford, Devine had become so popular on
Wall Street that when General Motors hired him as CFO and vice
chairman on December 13, 2000, the company's shares rose $1.44 to
$53.19. The shares had risen just 19 cents a day earlier, when GM
announced the closing of its Oldsmobile division.
Devine cemented his relationships with GM executives by
demonstrating his affection for cars as well as balance sheets.
He owned two Chevrolet Corvette and two Porsche sports cars.
When he complained of a sluggish response while turning the
steering wheel of a new SUV, Tom Davis, then group vice president
for trucks, told him a design change had already been ordered.
A few months after arriving at GM, Devine helped recruit
Robert Lutz, who had developed a series of hits including the
Dodge Ram pickup at Chrysler Corp. Lutz, 73, now vice chairman
for product development at GM, had been Devine's boss at Ford's
European operations two decades earlier.

Product Development

On March 1, Lutz was given control of all product
development programs around the world. He'll be using yardsticks
developed by Devine to make sure each family of new vehicles
meets its targets for cash flow and other measures on a global
basis, not just regionally.
Devine has pushed executives as far down as plant manager to
maximize returns on investments and to minimize debt, in addition
to boosting profit and revenue. Operating cash flow is the
easiest way to take a snapshot of these results, so he
recommended to GM directors that it be a centerpiece in executive
compensation.
Cash flow means income earned before companies have to pay
interest, depreciation and taxes.
During his four and a half years at GM, Devine has also
burnished his reputation for big-time deal making. In April 2003,
he was the lead negotiator when GM sold a 34 percent stake in
Hughes Electronics Corp. to Rupert Murdoch's News Corp. for $6.6
billion.
He had turned to Murdoch when antitrust regulators vetoed a
prior bid by EchoStar Communications Corp. that GM preferred. He
also had to contend with Hughes CEO Michael Smith, 61, the
brother of GM Chairman John Smith Jr., 67.

Lowest Interest Rates

Michael Smith, who favored a management buyout for Hughes
and its DirecTV satellite television service, publicly criticized
an offer from Murdoch as inadequate in March 2001. By the time
Devine completed the sale two years later, the value of Hughes
shares had dropped 78.7 percent to $11.48.
To get the deal done, Devine had to help encourage his boss,
John Smith, to listen to other people besides his brother, a
person familiar with the situation says. John Smith, through a
spokesman, declined to comment. Michael Smith didn't respond to e-
mails seeking comment.
In June 2003, Devine took advantage of the lowest interest
rates since World War II to sell $17.6 billion of bonds, the
largest-ever debt offering by a U.S. company.
Devine had worked with Morgan Stanley for two years planning
the sale, says Raj Dhanda, head of global debt syndicate at the
bank.

Tactical Decisions

``Early on, we didn't have the type of momentum we might
have hoped for,'' Dhanda says.
Devine helped ignite demand with dozens of tactical
decisions about a variety of bonds that might appeal to different
kinds of investors. He authorized the sale of the first-ever 30-
year corporate bond denominated in euros, Dhanda says.
He sold bonds denominated in dollars and British pounds as
well as convertible bonds. He made three dozen calls himself to
potential investors such as New York-based BlackRock Inc. and
Pimco.
Devine was also flexible enough to pay investors the right
yield for the risk they were taking, Dhanda says. On 10-year,
U.S. dollar-denominated bonds, GM's yield was 2.5 percentage
points higher than for the average U.S. corporate offering in
June 2003.
Devine left his successors with the obligation to repay the
bonds when they mature, on average, in 2023. In June 2003, his
subordinates were celebrating at the GM treasurer's office in New
York because they'd sold a third more debt than they had hoped in
just six days.

Crippling Burden

They had accomplished Devine's goal of lifting the crippling
burden of GM's unfunded U.S. pension liability. That liability
stood at $18 billion at the end of 2002, even with payments of
$4.8 billion during the year. GM made no payments during 2004 and
still wound up with a $3 billion surplus.
One of Devine's transactions has drawn scrutiny. In March,
Delphi Corp., GM's largest supplier, said it was examining its
own accounting for $85 million in credits received from GM in
2001.
GM issued the credits to help settle retirement costs the
companies had been untangling since Delphi was spun off from GM
in 1999.
GM recorded the credits as an increase in liabilities on its
balance sheet, not as an expense that would have lowered
earnings.
In an April 19 conference call, Devine defended the
accounting as proper, saying the credits related primarily to
retiree health care obligations that arose prior to the spinoff
and that couldn't be fully measured until the companies knew how
many workers would actually retire.

`No Enronitis'

So far, investors seem to be accepting Devine's view.
``There's no Enronitis here,'' Commerce Bank's Colbert says.
``You're dealing with quality folks.''
Enron Corp.'s bankruptcy in 2001 helped expose flaws in U.S.
accounting standards.
For now, investors even seem to be accepting Devine's
decision in April to abandon his earnings forecast for 2005.
``It's a smart move in terms of their negotiating position with
the United Auto Workers,'' says Carol Moreno, a New York-based
analyst at TCW Group Inc., which has $109 billion in assets,
including 2.3 million GM shares.
The lack of guidance keeps the union guessing about the
depth of the company's financial woes and the magnitude of health
care concessions management might want, Moreno says. UAW
spokesman Paul Krell declined to comment.

`Great Value Story'

Moreno says she likes GM's annual dividend yield, which was
6.06 percent as of May 20. If the company cuts the dividend to
encourage the union to provide relief on health care, the savings
would more than compensate investors for the yield they're
receiving now, she says.
The company has plenty of assets, including GMAC's
residential mortgage business, which can be sold during a crisis,
Moreno says. ``GM is a great value story,'' she says.
While engaged in continuous financial engineering, Devine
has maintained his own voice. He created a stir at a GM Christmas
party in 2001 by saying he was in no hurry to spend $400 million
for assets from South Korea's Daewoo Motor Co. to form a joint
venture.
``The longer it takes, the better,'' Devine told Bloomberg
News at the party.
At the time, Wagoner and predecessor John Smith were touting
alliances with companies like Daewoo and Fiat SpA as a way to
grow overseas with minimal investment. At the Christmas party,
Devine voiced a different view. ``Joint ventures are a bear to
run,'' he said.

Diplomatic Skills

Devine's diplomatic skills won him a round of applause from
union and company leaders on April 14, at the meeting in Dearborn
at which he warned of crippling costs.
Even so, UAW President Ron Gettelfinger said he wouldn't
reopen the union's contract with GM before it expires in 2007. He
promised to take other steps to help trim GM's projected $5.6
billion health-care expense for 2005 and other costs. Krell
declined to specify those steps.
GM's only public hint of the concessions it's seeking came
in March, when Lutz said blue-collar union workers should pay the
same out-of-pocket medical expenses as salaried workers.
That would save GM as much as $1 billion annually if union
retirees were included, says Sean McAlinden, an analyst at the
Center for Automotive Research in Ann Arbor, Michigan. Salaried
workers, for example, pay $35 per prescription for so-called
``recreational drugs'' such as impotence treatment Viagra.

Cost Disadvantage

For UAW workers, the co-payment is limited to $25 for brand-
name drugs and $10 for generics.
GM's cost disadvantage to Toyota in North America totals $10
billion annually, Devine told company and union officials on
April 14. He said that figure consists of $5 billion for health
costs and wages, $3 billion for excess manufacturing capacity and
$2 billion for ongoing retiree and warranty costs at Delphi,
according to people who attended the meeting.
To lift the burden of those costs, GM must sell more cars,
Wagoner said in his April 19 telecast to employees. He laid out a
set of goals, including edgier designs, improved quality and
lower sticker prices so that big rebates won't overwhelm the rest
of GM's advertising appeal.
He said that Cadillac and Chevrolet would get more new
models and that Buick and Pontiac would get fewer and would need
fewer, because their dealerships would be combined with those of
the GMC truck unit.

Marketing Efforts

Wagoner, who took direct control of GM's North American
units on April 4, promised special marketing efforts in big
cities like Los Angeles, Miami, New York and Washington. He
zeroed in on GM's Miami market share, which runs from 12 to 14
percent, as unacceptable.
Nationwide, GM captured 25.6 percent of U.S. vehicle sales
during the first four months of 2005.
When he announced first-quarter earnings, Devine said the
company was engaged in sensitive talks with the UAW about health
costs and overall manpower. GM has already cut its U.S. hourly
workforce to 106,000 at the end of last year from 125,000 in
2003.
Even so, GM's 25 North American assembly plants are capable
of building 5.7 million vehicles annually, or a million more than
the company can sell, according to Michael Bruynesteyn, a
Prudential Securities Inc. analyst.
Of those 25 plants, eight are underutilized, he says.
David Cole, chairman of the Center for Automotive Research,
says he expects GM and its competitors to save money by
collaborating more on designing and building engines and
transmissions. In December, GM and DaimlerChrysler AG announced a
jointly developed gasoline-electric power system.

Toyota's Prius

They will deliver the system in cars in 2007, 10 years after
Toyota introduced a gasoline-electric compact car called the
Prius.
Russ Koesterich, senior portfolio manager at Barclays Global
Investors in San Francisco, says he expects GM and Ford to
struggle in coming months with retiree health costs, rising gas
prices and tough competition from overseas.
Even so, Barclays bought 1.7 million GM shares in the fourth
quarter of 2004, bringing its total to 21.6 million.
``The valuations have become compelling,'' Koesterich told
Bloomberg Television on April 25. ``They're cheap on a relative
basis, and they offer an attractive yield.''
GM's 6.06 percent dividend yield compares with 2.04 percent
for S&P 500 stocks generally.

Written Off 2005

Merrill Lynch's Casesa says an inventory reduction of
100,000 vehicles in North America during the first quarter means
that GM has essentially written off 2005 from an earnings
standpoint.
He says he expects the company to earn 50 cents a share this
year and $2.40 a share in 2006. By that time, GM hopes to benefit
from a redesigned family of 11 vehicles, including the Silverado
pickup truck and the Tahoe SUV, that in the past have generated
$50 billion in revenue and 1.5 million unit sales each year.
Higher gasoline prices, which reached a record of $2.28 a
gallon in the U.S. on April 11, have helped lower demand for such
vehicles.
S&P analyst Scott Sprinzen said in a May 6 conference call
that additional downgrades are possible if high gasoline prices
continue to suppress SUV sales at GM or if GMAC links so many
assets to securities that it's selling that it won't have enough
left to repay unsecured bondholders.

Hostile Investor

Until Kerkorian came along in May, GM hadn't had a hostile
investor of any note since August 2000, when billionaire Carl
Icahn announced he'd spend at least $15 million for its shares.
Icahn walked away a few weeks later without disclosing how
many shares he'd purchased or at what price. He accused GM
management of sabotaging his bid by announcing it prematurely and
thereby driving up the share price.
Michael Losh, Devine's predecessor as CFO, said at the time
that GM management always understood they would be vulnerable to
a hostile investor if the share price fell below $60. The shares
sold for about half that on May 20.
Even at $32.98, GM's shares may be too expensive to attract
a hostile bidder today because of the massive restructuring the
company will require, says Brian Johnson, an auto analyst at
Sanford C. Bernstein & Co.
Potential investors from hedge funds and private equity
firms still aren't sure whether debt or equity would give them
more leverage as GM's crisis deepens, he says.

`Sharpening Pencils'

``There are people on Wall Street who are sharpening their
pencils and getting familiar with the situation,'' Johnson says.
He declined to name them.
If GM directors want to talk with private equity investors,
they won't have to go far. GM director George Fisher, 64, former
CEO of Eastman Kodak Co., is also a senior adviser at KKR. GM
Director Kent Kresa, 67, retired CEO of Northrop Grumman Corp.,
is also a senior adviser for Carlyle Group.
Casesa says he believes GM's hand will be forced by higher
borrowing costs associated with the downgrade to junk as well as
by weak automotive cash flow.
He says he expects the company's automotive unit to consume
$2.3 billion in cash this year compared with a decade-long peak
in positive cash flow of $4.9 billion in 2002.
As the consequences of weak cash flow manifest themselves,
Casesa says, GM's directors will be forced to consider selling
the company's main nonautomotive assets: GMAC's residential
mortgage and insurance units.
Those two units together are worth two-thirds of GM's $18.6
billion in total market capitalization, Casesa says. Jerry
Dubrowski, a GM spokesman, says the company has no plans to sell
the units.

Make a Choice

If GM directors decide to go ahead, Casesa says, they'll
have to make a choice between spinning the mortgage and insurance
units off to shareholders or finding a buyer and using the
proceeds to repair the company's automotive divisions.
To make that choice, they'll have to decide first whether
there's any hope that GM's automotive units can survive. That
decision, Casesa says, will be affected in part by the value of
concessions GM can extract from the UAW before or during 2007
contract talks.
Devine's ability to voice independent views without overt
criticism of the company hasn't gone unnoticed in the GM
boardroom, says Michigan State's Jennings.
``That's what directors like: people who'll stand up to them
but who'll do so in a way that's polite,'' says Jennings, who's
advised corporate directors in the U.S. for 40 years.
Jennings describes the GM board as relatively powerless
because of its decision two years ago to give Wagoner the
combined titles of chairman, CEO and president.

Devine Front-Runner

The board made that decision at the urging of John Smith,
who retired as chairman in 2003. ``How can a board be independent
of management if the CEO is also chairman of the board?''
Jennings asks.
If the GM board decides to reverse itself and split the jobs
again, Devine would be the front-runner for chairman, Jennings
says.
``For Rick Wagoner, this is his last stand,'' says Sasha
Kamper, who helps manage $65 billion including GM debt at
Principal Global Investors in Des Moines, Iowa.
``If the board doesn't see progress in the next twelve
months, they'll go back to the drawing board,'' she says.
``Investors see Devine as a bottom liner, as a guy who'll make
the tough calls, so maybe it's logical to expand his role.''
Even if Wagoner survives as chairman, Casesa says, Devine
will be a prime architect of any plan to rescue GM. He says the
directors, as they change forever a company that's been the
world's largest automaker for almost 80 years, will be certain to
turn to John Devine and ask him what he thinks.

gavriil

Kerkorian's Tracinda Boosts Stake in GM - - By AP - - Source: biz.yahoo.com

charliemike

Krekorian is 87 years old ... I can't imagine he's the only one working this deal

gavriil

GM shares set to open lower after Kerkorian's sale - - Reuters / December 21, 2005 - - Source: Automotive News

gavriil

I'll start buying GM shares at 10 bucks or lower.

Loseit

iTrader: (1)

me too!
his sale will drop em even more.
I bet he rebuys when they drop!!

titan

Me too. I've been watching this very closely. A $10 price will signal a good deal; either the price will climb from there after their crazy turnaround, or they'll go into bankruptcy. That means, all bets will be off with the UAW, etc., and they're pension obligations will be erased. They can emerge a smaller and stronger company. Also, there brands are worth A TON. Any of there competitors would love to buy a division (the right one, atleast). It could be a situation like K-Mart.

Shawn S

Buying cheap is good, but if/when they file, those shares are worth ZIP.

gavriil

If they enter Chapter 11, their shares will go to under a dollar. And they will worth nothing after (and if) GM exits Chapter 11 (at which point new shares will be issued).

gavriil

Kerkorian to buy back 12 million GM shares - - Source: Automotive News / January 25, 2006

gavriil

For reference:

1 DAY


-----------------------

1 YEAR


Source: Yahoo.com

gavriil

So 18 was the bottom for now... Hmm...

phipark

Did we ever have a thread or post about him "strongly" suggesting to cut salaries for executives to the plant floor?

titan

He's shrewd. He knows what GM's really worth (without the healthcare costs, etc.). If GM goes into Chap. 11, and emerges a leaner, meaner company, without free of those costs, it'll put them back on an even playing field with the Japanese. If that happens, the stock will eventually go way higher. It's the same with K-Mart. When they went into Chap. 11 the stock was $.01. Those who bought the stock bonds got a great return when Sears purchased them. If the stock hits $15, I'm buying.

gavriil

I dont know if Kerkorian ever said that but York did say that very directly and he said a lot more than that during the Detroit Auto Show days.

gavriil

^ York works for Kerkorian. He's like his CFO.

phipark

Right, we're are the same page.

M TYPE X

But until then, GM is Kirk's biatch. GM just gets slapped around by this guy.
It's pathetic. Not that I have a lot of sympathy for them.

heyitsme

^Seriously, if average people follow a stock tip from someone who has serious money, they will easily end up broke.

M TYPE X

Case in Point: Warren Buffett is NOT your friend!

After all, I think he is 'The Man.'