Shares of GM are getting slammed again today, but what’s the surprise here? The business sf awful and the company warned that it faces serious liquidity issues as soon as 2009. Duh. That’s why auto industry leaders have been in Washingon and not in Detroit running their businesses
Even if GM implements the planned operating actions that are substantially within its control, GM’s estimated liquidity during the remainder of 2008 will approach the minimum amount necessary to operate its business. Looking into the first two quarters of 2009, even with its planned actions, the company’s estimated liquidity will fall significantly short of that amount unless economic and automotive industry conditions significantly improve, it receives substantial proceeds from asset sales, takes more aggressive working capital initiatives, gains access to capital markets and other private sources of funding, receives government funding under one or more current or future programs, or some combination of the foregoing.
The market doesn’t believe that GM is overstating the severity of its problems in order to gain leverage in Washington. This is just bad. Meanwhile, don’t look for a marriage with Chrysler (not that that was evering going to help with anything). The company says those talks are done. Actually, it just said that that it was no longer pursuing any strategic acquisition, prompting this amusing press release from Chrysler, which can be boiled down to: We may or may not have had talks with GM, but those talks with GM weren’t our priority anyway.
Meanwhile, Barack Obama is getting set for his first news conference as President Elect. No doubt this will come up.
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