Should GM just file for bankruptcy? - Top Stocks Blog - MSN Money
 
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Should GM just file for bankruptcy?

Posted Nov 11 2008, 02:29 PM by Kim Peterson
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A Deutsche Bank analyst gave General Motors' stock a price target of zero. Even if the company averts bankruptcy, Rod Lache noted, its future is likely to be "bankruptcy-like."

Meanwhile, hedge fund manager Bill Ackman says GM would be better off filing for bankruptcy instead of taking government bailout money.

"It has been hamstrung for years because it has too much debt and it has contracts that are uneconomic," he said on The Charlie Rose Show, according to Bloomberg. "The way to solve that problem is not to lend more money. They should do prepackaged bankruptcy."

GM needs to get out from its debt, and bankruptcy allows it to seek protection from creditors while continuing to operate, he said. GM executives have ruled out bankruptcy, opting to ask for federal aid.

Shares of GM dropped 15% to hit a 65-year-low today as investors reacted to news that the company's liqudiity would be just barely enough to run its business through the rest of this year. Liquidity will fall below minimum levels needed next year.

Still, JPMorgan analysts recently rated GM's bonds a "buy," saying that GM has several options to improve its bottom line.

"We believe GM has several sources of liquidity it can access to bridge the company to 2010 when it realizes considerable cost cuts," the analysts said in a report. Those sources include government loans, cost cuts and raiding GM's overfunded pension plan.

Related reading:

Automakers ask for bailout to keep wheels turning

A government bailout won't save GM

Can GM and Ford survive?

Car dealerships the new endangered species?

Not charged up about GM's electric car

 

Comments

 

yes please bankrupt

Bankrupt - As long as THEY KEEP HONORING THEIR WARRANTY - I just bought a new Vette 6 months ago BEFORE all this crap started.......

the fact that G M workers want over 50 bucks an hour to piece together crap.. enough said.... right ? oh let's not forget the G M dealers that make you look like a sucker after you buy their products.. I and my family over the years paid through the nose buying and driving chevys.. however when my uncle showed us his mileage and cost statements for his Honda Civic over the last nine years ....wow .. his cost per mile came out to .22 to our 1.00 that's not including trade in . also the fact his Civic is at the 300,000 mile mark and still looks good and drives like new. most of us switched over....yes it's time to bury GM.

I think they whole auto industry needs a revamp from the CEO's on down including the factor workers.  The employees need to take a pay cut along with all the big wigs too and they need to drastically lower the price of cars and start making smaller more fuel efficent cars.  I dont feel bad for the car industry at all since they have been overcharging for crap vehicles.  I feel they should go bankrupt as I DO NOT want to bail them out with my tax money!

Doesn't really make sense to me why the government is even considering bailing out any of the auto industry.  My thinking is if you as a company can't seem to get it right after so many years and actually make things that people want, you don't deserve to be in business.  I think what is going on here is the greedy autoworkers union and also the over stretched resources of GM/Ford/Chrysler going to health benefits to all retirees and items like those.   I believe we would all be better off without companies that don't have the consumer interests in mind first.

GM can't compete. They don't need to be bailed out because they stil won't be able to compete. Their labor unoins are too strong and are killingf their company. No matter how much money the government gives them they will still be building junk. They need to be bankrupt and start over. IT will be better for everyone in the long run.

Were GM execs earning more than 6 figures, and griping about union wages? You bet. Wipe it out, time we put this Dinosaur mentality to bed.

Generous Motors has been skrewing the american people for years. In fact it seems like they are run by the same peopl ein our government. If we get in trouble lets ask for some handouts. The problem is they catered to us. We wanted big and bad, so we got big and bad at a cost. When the price of oil hit the roof, we didn't want big and bad. They got caught on the wrong side of the curve. While not investing enough into producing a quality product at an affordable price, they jacked the price to give their share holders a nice payment. Are cars worth what they charge? NO! Why when everything is going down in price, cars are jumping up in price. They have made their bed and now they need to lay in it. When will we wake up as a country and stop getting skrewed by everyone. We need to stand up for ourselves.

I visited the Framingham ,Mass plant in 1978. I watched UNION workers putting wheels on Cutlass' and Regal's and when asked the tour guide told us that worker was getting $17 Hr ! In 1978 ! That's just wrong. I sold GM's for 20+ yrs.Glad I got out 6yrs ago. We had Caprice wagons come in with beer cans in the frames, some had beer bottles inside the doors. The union workers did some of this mess themselves. I have now gone to Toyota. My maint.costs have dropped huge. Sorry to say... My family could not believe it last christmas when I drove in in a Toyota. Until the unions are gone they cannot be price competative

GM moved plants to Canada and Mexico so they could reduce their operating costs, yet the price of their automobiles went up 50%. A $20,000 trucks price went to $40,000,  all under the Nafta plan. While the laid of over 100,000 workers in Michigan. I may not be an economist but a realist, yes. They got greedy giving out bonus's to themselves laying off workers and delivering a product that has a 5-7 year lifespan, then starts needing expensise repairs. Unbelievable--- The heartbeat of America builds trucks in MEXICO, and expects laid off Americans to be able to afford a $40,000 truck or car. I dont even want to get into the ridiculous cost of the retro vehicles. Well there my rant

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