Word: gm
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Dates: during 2000-2009
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Satellite radio's initial focus was on commuters and their cars, mostly from GM. But XM has long since realized that to keep growing, it has to be heard even when you're not rolling in your 'Sclade...
Could it be that Wall Street is in overdrive about GM's brightening prospects? Certainly, the case for survival looks a bit stronger. Analysts were encouraged by GM's first-quarter sales of full-size SUVs. Even if gas prices continue killing the segment, the thinking goes, GM could pick up market share. They like York's presence on GM's historically wimpy board. Analysts also figure GM will pay whatever it takes to avoid a Delphi strike. With roughly 6,000 blue-collar workers expected to be left at Delphi, GM "could easily afford to compensate those employees...
...course, any number of developments could puncture Wagoner's tires: oil hitting $100 a barrel or a recession in which auto sales tumble. Moody's recently warned of further downgrades of GM's bond ratings, already below investment grade, after GM said it may have to renegotiate terms for $5.6 billion in credit. Should GM's unsecured debt fall below a CCC rating, the GMAC sale would be in jeopardy. "We have to get the GMAC deal closed," Wagoner says when asked what could derail a turnaround...
Skeptics also question GM's books. The Securities and Exchange Commission is investigating the way GM accounts for retirement benefits and transactions between GM and Delphi. GM took a charge of $800 million last year to pay for factory closures, but that may not reflect the final cost of workers' opting for the jobs bank instead of retiring; analyst Bruynesteyn figures GM will have to book another charge for that in 2007. GM's various cost-cutting moves should boost the bottom line, resulting in net income of $1.6 billion next year, Bruynesteyn estimates. Yet the healthier GM's finances...
Lutz is right about the perception problem: GM needs Wall Street and the media to stop mentioning the B word. Analysts say GM has lost one percentage point of U.S. market share in the past year - about 170,000 vehicle sales - as buyers shun its models, fearing a meltdown. Company execs stress that GM has ample cash. But bankruptcy is a psychological event as much as a financial one; Delphi sought Chapter 11 protection not because it ran out of money but because it ran out of credibility, sparking a run on the bank. "Someday, someone will be brave enough...