In a strange, perverted sort of way, the less than expected loss for the 2nd quarter may actually hurt chances of the 3-way alliance occurring between GM, Renault and Nissan. Everyone expected a loss for the 2nd quarter, so that's no surprise. The surprise was that the loss was less than expected—meaning
GM's restructuring plan (the one that's now in place) may actually be working. If that's true, many will argue that there's no reason to bring in the Ghosn Gang...
Snippet: "GM insists results have no impact on the talks, but I don't see how they wouldn't because they weaken the idea of an alliance as necessary to save GM when it looks like GM is pretty well saving itself," said Rebecca Lindland, senior analyst with Global Insight.
"Rick Wagoner is the right guy to run GM, and since GM is fixing itself, why bring in another party to serve as a distraction? The last thing GM wants is a rescue ambulance crashing," she said.
More info
here.
Categories: General Motors,Nissan,Renault,Trends
mirth says:
09:15 AM, 07/27/06
When I read about GM's "good" news, I can help but think that everyone's ignoring the elephant in the room whose name is "Delphi". Last year Ford bit the bullet and resolved its problems with Visteon (and partially its current financial results are reflecting that), but GM allowed Delphi to go into bankruptcy and it's just a matter of time until they have to pay the piper. They have contractual responsibilities to Delphi workers that could cost them billions.
mikesright says:
01:04 PM, 07/27/06
The risk for Delphi already reflects itself in the stock and bond prices, mirth. Remember, last year's loss included $6 billion of liabilities recorded to fix Delphi. Also, everyone analyzing GM knows that they have knockout products heading our way that represent 40% of GM's volume in the marketplace, and that will shore up the marketshare in a big way, starting 4th qtr. The fact they made $1.2 billion from operations is amazing, because the effects of the cost cuts come on at $2.25 billion/qtr, starting next qtr. They will start to RAKE IN the profits!
mirth says:
08:44 AM, 07/28/06
uh huh....call me skeptical but I doubt GM will be raking in profits by next quarter.