Henderson to take over as GM chief

By Bernard Simon in New York
Published: March 30 2009 14:10 Last updated: March 30 2009 14:10

General Motors announced on Monday that Fritz Henderson, the beleaguered US carmaker’s president and chief operating officer, will replace Rick Wagoner as chief executive, and that a majority of its directors will be replaced.

Mr Wagoner stepped down on Sunday at the request of the White House as part of the widening shake-up at GM, which was the world’s biggest carmaker until last year but is now dependent on government aid for its survival.

Kent Kresa, chairman emeritus of Northrop Grumman, the US aerospace group, has been named GM’s interim non-executive chairman. Mr Wagoner had been executive chairman.

Mr Kresa said in a statement that the board had “recognised for some time that the company’s restructuring will likely cause a significant change in the stockholders… and create the need for new directors with additional skills and experience”.

He added that the board intended to nominate a slate of directors at the next annual meeting, due to be held in August, that would include a majority of new board members.

No decision has yet been taken on which individuals will be nominated or will choose to leave the board.

Mr Henderson, 50, has worked for GM since 1984. Prior to his appointment as chief operating officer, he was chief financial officer and, earlier, head of GM Europe.

In a valedictory statement, Mr Wagoner, 56, said that “GM is a great company with a storied history. Ignore the doubters because I know it is also a company with a great future.”

Source;
http://www.ft.com/cms/s/0/4edc2a2c-1d22-11de-a527-00144feabdc0.html

GM loses $9.6 billion in last quarter bringing the total to $30.9 Billion for 2008

Embattled automaker reports larger than expected in fourth quarter loss and burns through more than $5 billion in cash; says it needs new loans this year.

By Chris Isidore, CNNMoney.com senior writer
Last Updated: February 26, 2009: 9:51 AM ET

NEW YORK (CNNMoney.com) -- General Motors posted a $9.6 billion net loss in the fourth quarter, a period in which its sales plunged and it needed a federal bailout to avoid filing for bankruptcy.

The company also disclosed that it burned through $6.2 billion in cash during the last three months of the year. The company ended the quarter with cash of $14 billion.

If not for the $4 billion federal loan it received in the quarter's closing days, GM's cash level would have fallen below the $11 billion to $14 billion in cash the company has said it needs to continue operations.

Since receiving the first installment of that loan, GM (GM, Fortune 500) has gotten another $9.4 billion in federal assistance. The company asked for an additional $16.6 billion in the turnaround plan it submitted to the Treasury Department last week. GM disclosed Thursday it will need this at least $9 billion of that money in 2009 to weather the current downturn.

The company is expecting to burn through another $14 billion in cash this year, with most of it taking place in the first quarter as the company struggles to deal with weak demand and significant overhead costs.

GM chief financial officer Ray Young said the company's request for more loans was made with that weak outlook in mind.

"We're not forecasting any heroic recovery for the industry in '09," he told investors.
The company also said it anticipates its outside auditors will issue a statement on whether the company is a "going concern." The statement could be important not only to investors but to federal officials who are determining whether the company is viable in the long-term.

If the government determines GM is not viable, it would demand immediate repayment of the company's loans.

The auditor's statement will be included in GM's year-end results filing with the Securities and Exchange Commission. GM disclosed Thursday it had filed for a two-week extension to submit that report.

The company also disclosed that its hourly and salaried pension plans are currently underfunded, on a combined basis, by about $12.4 billion. But GM said it does not anticipate needing to make a further contribution to those funds over the next three years.

GM facing challenges around the globe

As bad as GM's results were, it could have been worse. The company posted a $533 million gain because of the fact that GMAC, the finance unit in which it held a 49% stake during the quarter, got its bond holders to agree to swap debt for equity. GMAC become a bank holding company as a result of the debt swap, which significantly reduced GM's stake in the unit.

Excluding special items, GM lost $5.9 billion, or $9.65 a share, in the quarter. Analysts surveyed by Thomson Reuters had forecast a loss of $7.39 a share, compared to a profit of 8 cents a share on that basis a year ago.

The operating losses were particularly pronounced in GM's core North American market. It lost $3.5 billion before taxes in the quarter, up from a $1.3 billion loss in North America a year earlier.

Revenue in the North American unit plunged about 32% to $19.3 billion. GM's market share also slid 1.7 percentage points to 21%.

But GM, which now sells more than half its vehicles outside of North America, is facing challenges around the globe.

Losses more than quadrupled in Europe, and the company lost money in its Asia-Pacific and Latin America-Africa-Middle East units. GM posted profits in those two regions a year ago.
Overall revenue at GM plunged 34% to $30.8 billion, significantly worse than the Thomson-Reuters forecast of $35.1 billion.

For the full year, GM reported a net loss of $30.9 billion. The automaker has posted net losses of $82 billion over the past four years as its U.S. sales and market share plunged and it closed plants and slashed staff in an unsuccessful effort to stem losses.

Shares of GM fell about 8% in early morning trading Thursday.

Separately, GM rival Ford Motor (F, Fortune 500) filed its own year-end financial statement with the SEC Thursday. Its filing included an "unqualified" statement from the company's outside auditor that "there is no substantial doubt" about Ford's ability to continue as a going concern.

Because it arranged for billions of dollars of asset-backed loans and lines of bank credit years ago before the current credit crunch, Ford is in a much better cash position than GM and privately held Chrysler LLC.

Ford has yet to need federal loans but it has asked the government for a $9 billion line of credit in case the economy deteriorates further.

First Published: February 26, 2009: 7:19 AM ET

Source;
http://money.cnn.com/2009/02/26/news/companies/gm_results/?postversion=2009022607

GM, Ford May Face Bankruptcy on Slowdown, S&P Says

Well, these are some pretty intense times with how the stock market has taken a tumble, leading the way is GM and FORD. Times have not been good to either company and it is heavily reflected in how the economy has gone. A healthy domestic car sector is a healthy economy. Let's hope they can turn it around.
Oct. 10 (Bloomberg) -- General Motors Corp., Ford Motor Co. and Chrysler LLC may be forced into bankruptcy by slowing economies and dwindling U.S. auto sales, Standard & Poor's analyst Robert Schulz said.

"Macro factors could overwhelm them at some point'' even as the three biggest U.S. automakers vow to stick with their turnaround plans, Schulz, S&P's lead automotive credit analyst, said today in a Bloomberg Television interview in New York. The companies said they have no plans for a bankruptcy filing.

His assessment underscored the pressure on GM, Ford and Chrysler as the worsening global credit crisis makes it harder for buyers to get loans and dealers to finance their operations. S&P said yesterday it may further trim credit ratings for GM and Ford on forecasts for 2009 auto demand falling to the lowest level since 1992.

With all three companies working to boost cash, any bankruptcy filing would be a last resort, not a "strategic'' decision, Schulz said.

"We don't see that as something they would choose,'' he said. Schulz said the "trigger'' for a forced restructuring under bankruptcy protection would be based on the automakers' ability to preserve liquidity as sales decline. Industrywide U.S. sales slid 27 percent last month, the most in 17 years.

'Not an Option'

"Bankruptcy is not an option GM is considering,'' spokeswoman Renee Rashid-Merem said yesterday. "It would not be in the interests of our employees, stockholders, suppliers or customers.''

Ford and Chrysler also have said they're not considering bankruptcy.

GM rose 7 cents, or 1.5 percent, to $4.83 at 1:40 p.m. in New York Stock Exchange composite trading, while Ford dropped 8 cents to $2. GM slumped to a 58-year low yesterday and Ford closed at its lowest since 1982. Chrysler is closely held.

Operating-cash needs at GM, Ford and Chrysler are "substantial, so if it looked like they were going to be pushing toward that number because of these operating losses and cash usage, that's sort of the point where they'd have to consider'' bankruptcy, Schulz said.

S&P said yesterday that its debt ratings for GM and Ford, already at six steps below investment grade at B-, may be lowered again because the automakers face a "serious challenge'' in 2009.

Barclays Capital reduced its target stock price for GM to $4 today, with analyst Brian Johnson in Chicago citing dwindling global auto demand.

GM's Cash Needs

"With auto sales stalled in the U.S. and beginning to contract in the rest of the world, we believe GM's cash needs are increasing,'' Johnson wrote in a note. "Moreover, the downside risk of greater decline in worldwide auto sales driving greater cash needs is increasing."

GM and Dearborn, Michigan-based Ford lost a combined $24.1 billion last quarter. GM last posted an annual profit in 2004, while Ford hasn't had a full-year profit since 2005.

GM's Rashid-Merem said the automaker still expects to add $15 billion in liquidity by the end of next year, including speeding up plans to cut $10 billion in costs.

Ford has a cash cushion, spokesman Mark Truby said yesterday in response to S&P's report raising the prospect of another ratings cut.

Ford's Borrowing

"We were fortunate to go to the markets at the right time,'' Truby said, referring to $23.4 billion borrowed in late 2006 to help pay for shutting plants and cutting jobs while developing new models.

He said Ford is reviewing its liquidity and will give an update when third-quarter financial results are released. Ford hasn't given a date for the release, which the company typically issues later in October.

Chrysler has no plans to declare bankruptcy, spokeswoman Shawn Morgan said yesterday in an interview.

The automakers won Congress's approval last month for funding a $25 billion loan package to help develop more fuel- efficient vehicles. Those funds will be spread primarily among Ford, GM and Auburn Hills, Michigan-based Chrysler, though other automakers, such as Volkswagen AG, have said they will seek a portion.

Regulators are writing the rules for that borrowing even as auto-market conditions worsen. Industry researcher J.D. Power & Associates estimated yesterday that U.S. industrywide sales will fall to 13.6 million this year and 13.2 million in 2009. Last year's total was 16.1 million.

Industrywide Outlook

Industrywide sales of 13 million autos next year would mean shrinkage in the overall U.S. vehicle fleet, said Erich Merkle, an analyst for consulting firm Crowe Horwath LLP in Oak Brook, Illinois.

"We are going to find people where they may have had three cars and now have two, and two cars now have one, and a lot of that is just because of the economic environment,'' Merkle said. "They may not have the ability to buy a new car and even if they do, they may not be able to get financing for that car.''

Global demand in 2009 may be even worse, with "an outright collapse'' now possible, according to J.D. Power, which is based in Westlake Village, California.

GM may announce further production cuts or plant closures as early as next week, the Associated Press reported today. GM spokesman Tony Sapienza declined to comment on the report in an interview.

In July, GM said it was considering further cuts to its metal stamping and engine plants because of reduced U.S. sales.

GM's 8.375 percent note due July 2033 fell 5.5 cents to 19 cents on the dollar today, yielding 43.9 percent, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

Ford's 7.45 percent note due July 2031 declined 12 cents to 22 cents on the dollar, yielding 33.8 percent.

To contact the reporters on this story: Jeff Green in Southfield, Michigan, at jgreen16@bloomberg.net; Greg Bensinger in New York at gbensinger1@bloomberg.net


Below each logo is a link to the ticker for each company's stock quote in US funds.

Ford Motor Co. General Motors Corp.

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http://www.bloomberg.com/apps/news?pid=20601082&sid=aFTJLqMhYLAs&refer=canada