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Posted
Jul 08 2008, 10:57 AM
by
Anthony Mirhaydari
Rating:
As $100 fill-ups become the norm and resale values for gas-guzzling vehicles plunge, owners of trucks and SUVs are getting a painful lesson in what economists call "demand destruction." In addition to switching from Ford F-150s to Toyota Priuses, rising oil prices may force Americans to follow Europeans with one car per family.
This would be the worst of all worlds for investors, since not only is the product mix shifting from high-margin truck-based products to lower-margin economy cars, but overall volumes would decline as well.
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Posted
Jun 30 2008, 03:59 PM
by
Charley Blaine
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Chrysler exists because Lee Iacocca bet the company on the minivan. Now, thanks to the oil crisis, the minivan looks like it could be on its last legs.
One of the company's two minivan assembly plants will be shut indefinitely on Oct. 31, Chrysler said today. The problem is that families -- the target market for minivans -- have been particularly affected by rising gas and food prices, falling home values and more difficulty in borrowing money.
It's a humiliating development for Chrysler, which spent $1.4 billion on the redesign of its two industry-leading minivans, the Chrysler Town & Country and Dodge Grand Caravan. And then saw sales go, well, nowhere.
"Everything that a family needs is more expensive right now, and so the last thing they're looking at is, 'Do they need to replace their Honda Odyssey?'" said Rebecca Lindland, an auto analyst for Global Insight, the economic consulting firm
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Posted
Jun 10 2008, 03:54 PM
by
Charley Blaine
Rating:
Here's a sign of the times, and, with the price of gasoline topping $4 a gallon, hardly a surprise.
Ford Motor Co. investors have flocked to Kirk Kerkorian's offer to buy 20 million additional shares of the company, a move that will help the billionaire investor increase his stake in the auto maker to about 5.5%.
Kerkorian's Tracinda Corp. said Tuesday that its tender offer of $8.50 a share drew overtures of more than 1 billion of the company's shares -- or nearly half of Ford's outstanding stock. Tracinda will buy 20 million shares for about $170 million. Tracinda could have walked away
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Posted
Apr 28 2008, 09:01 AM
by
Robert Walberg
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Here he goes again. After runs at General Motors and Chrysler LLC in recent years, Kirk Kerkorian's investment company, Tracinda Corp, issued a release stating that it plans to bolster its stake in Ford to 5.6%, by offering $8.50 per share in cash for an additional 20 million shares. Kerkorian already owned 4.7% of the stock, or 100 million shares, at an average cost of $6.91.
Kerkorian cited Ford's improved operating performance as the rationale for his investment. Last week Ford shocked the markets when it announced a quarterly gain of 20 cents per share. The street was looking for a per share loss of 16 cents. Ford has now handily beaten the consensus estimates for six consecutive quarters, giving credence to Kerkorian's claim that the company's turnaround efforts are gaining traction.
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Posted
Apr 03 2008, 11:45 AM
by
Douglas McIntyre
Filed under: Apple, Comcast, Ford, DirecTV, Verizon, Sirius, XM Satellite Radio, AT&T, Time Warner Cable, Toyota, GM, Clear Channel, Dish Network
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When the Justice Department cleared the merger of Sirius with XM Satellite there was anticipation that once the deal got done the shares of both companies would go up. A year ago, the combination was viewed as a dream deal.
If anything, the shares have dropped. Sirius is below $3 and XM is below $13. The market began to realize that the year wasted on getting government approval was a year the companies need to stay competitive. XM has over $1 billion in debt. Refinancing it in the current market would be nearly impossible. Selling shares would lead to extremely large dilution. As we recently noted, Goldman Sachs even put Sirius on its "Conviction Sell List" with a price target of $2.25.
Growth at Sirius has slowed considerably. In the fourth quarter revenue rose only 29% to $250 million. But, for the full year, revenue was up 45%. Subscriber deactivations in the fourth quarter were almost 540,000 compared to 330,000 in the same quarter of 2006. The firm's net loss was $166 million. Long-term debt was almost $1.3 billion.
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Posted
Feb 11 2008, 01:44 PM
by
Douglas McIntyre
Rating:
Like some many unsuccessful companies before it, Chrysler wants to cut its way to profitability. The privately held company, run by Home Depot exile Robert Nardelli, will probably chop its number of brands 50% and dealerships by a third.
According to The Wall Street Journal, "over the next three years or so, the now closely held auto maker plans to drop as many as half of the approximately 30 vehicles it now produces, a move likely to cut sales at least for a while." A while may be forever.
It is not believable to think that Toyota, Honda, and, to a lesser extent, GM will not market vehicles directly into the niches which Chrysler gives up. Toyota especially has the dealer network and broad brand line-up to do this.
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