GM has been in the news a lot recently. I’ll try to recap some of the more interesting topics:

GM 2nd Quarter Profit - GM announced that they had earned $1.3 billion in the 2nd quarter and had positive net cash flow of $2.8 billion. This is the General’s 2nd quarter in a row with positive earnings and cash flow. Chairman Ed Whitacre was heard exclaiming, “Yeee-haw!” In related news, the FAA has issued a warning to all commercial aircraft to watch out for pigs over Detroit.

Big Ed Whitacre announces retirement - Chairman and CEO Ed “I don’t live in Detroit, I just work there” Whitacre announced that he is stepping down as CEO on September 1 and as chairman December 31. Though nobody thought Ed was in it for the long term, the news was met with some surprise. The timing was to help facilitate the impending IPO (see below), as investors would want to know who’s running the show before they pony up the cash to buy the stock. Taking both positions at the dates above is Dan Akerson, who has been on the board since bankruptcy. He is an investment banker and an expert in financial matters (editors note: but can he tell the difference between an intake manifold and an emory board???). He is also a telecom veteran, like Whitacre. Roger Daltry sang at the press conference.

GM files for IPO - in a surprise to nobody, GM today filed its first registration papers with the SEC (not the Big 10) to file for its IPO. They expect to actually go public later this year. IPO filings are not particularly interesting, except for 1 major exception - the Risk Factors. This section typically shares some of management’s biggest fears about their business. This is a rare look into the company. They have to be brutally honest, because non-disclosure of significant risks could be the subject of a future lawsuit. GM’s Risk Factors are no exception. Here are a few of the more interesting tidbits. All of these points are followed by a detailed discussion which are too long to be included here:

The UST (or its designee) will continue to own a substantial interest in us following this offering, and its interests may differ from those of our other stockholders. (Gee, ya think?)

New laws, regulations, or policies of governmental organizations regarding increased fuel economy requirements and reduced greenhouse gas emissions, or changes in existing ones, may have a significant effect on how we do business. (Wait, government regulations can affect your business? Who knew?)

The ability of our new executive management team to quickly learn the automotive industry and lead our company will be critical to our ability to succeed. (So you have a bunch of inexperienced bozos running the operation. Great.)

The costs and effect on our reputation of product recalls could materially adversely affect our business. (Wait, is this the Toyota IPO?)

We have determined that our disclosure controls and procedures and our internal control over financial reporting are currently not effective. The lack of effective internal controls could materially adversely affect our financial condition and ability to carry out our business plan. (Really? This isn’t giving me a warm, fuzzy feeling about your company…)

So, to sum up, your biggest shareholder has different “interests” than the rest of the shareholders, that same shareholder is going to make up new rules that will screw you, your management doesn’t know its butt from an exhaust pipe and can’t trust the numbers it’s given and the customers are scared that your products will suck. What’s not to like about that? Where do I sign up for these shares?

No Comments »

No comments yet.

RSS feed for comments on this post. TrackBack URL

Leave a comment

You must be logged in to post a comment.