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Source link: http://archive.mises.org/4330/the-street-beats-up-on-gm/

The Street Beats Up on GM

November 12, 2005 by

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GM spokesman Jerry Dubrowski said speculation of a GM bankruptcy is inappropriate and doesn’t reflect the predominant view on Wall Street. “We have no plans to declare bankruptcy, and we don’t think it’s appropriate to continue to comment on what I would term sensational speculation by some observers,” he said.

GM has reported four consecutive quarterly losses for the first time in more than a decade. So far this year, the automaker has racked up more than $4 billion in North American losses in the face of flagging demand for its gas-thirsty SUVs, heightened foreign competition and mounting health benefit and pension obligations.

Fitch Ratings credit ratings agency lowered GM’s debt deeper into “junk” status Wednesday, a move that will make it more costly for the automaker to borrow money.

Even more stunning is the reality of GM’s deep dive in market value:

GM’s shares have lost more than 14 percent of their value this month, and its market value has slid to $13.3 billion — now one-twelfth of Toyota Motor Corp.’s $164 billion market value.

Morgan & Company has some particularly revealing graphs about the position of US automakers.

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This comes on the heels of news that General Motors, just this week, announced that it will be restating earnings from 2001 and forward.

A GM spokesman had this to say: ”The issue here was that we basically booked the income in the wrong period.”

The 8-K – filed with the SEC - is here. It describes the reason for restatement.

{ 56 comments }

Matthew Devlin November 17, 2005 at 1:19 pm

GM is going the way of the old US steel mills.
Good riddance.

matt November 19, 2005 at 12:50 am

I have a 1994 Accura Integra with almost 300,000 seriously abusive miles on it. I am taking it in for a new clutch on Monday. Other than that, it runs like new. I’m not kidding. It’s like the energizer bunny. But I thought my family needed a bigger car.

I fell for the advertising and now I have a 2005 Chrysler PT Cruiser with less than 20,000 miles on it. It is a nice car. It is big enough for my wife and 2 children. But the engine (it whines and rattles), the handling (uuuggghh!), and the attention to detail in the manufacturing leave much to be desired. And the oil pressure light keeps coming on for no reason.

Next time I’m buying another Accura.

(Yes, I know Chrysler is German now, but this car was built in America. And yes I love my country, but I am ashamed of our auto industry.)

Larry Bartley June 10, 2006 at 10:37 pm

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