GM Shares Fall 4.1%; Downgraded To 'Sell'

[Perian]

Link: http://www.forbes.com/2007/01/03/gm-...rtner=yahootix

Article quote:

Analysts predict that Toyota will gain market share in the U.S. in 2007 while General Motors, the parent company of Chevrolet, will likely lose ground.

On Wednesday, shares of Toyota rose 0.7% to $135.30 while shares of GM sank 4.1% to $29.45.

Banc of America analyst Ronald Tadross downgraded GM shares to “sell” from “neutral” and lowered his target to $25 from $30 on Wednesday.

The analyst said lower GM market share in the first half of 2007 should get investors worried about a sharp decline in new product volume for the fourth quarter of this year.

He added that GM vehicle overpricing and inventory levels are actually worse than in the first quarter of 2005, when the company last missed earnings expectations.

Standard & Poor’s Equity Research analyst Efraim Levy also told his clients to sell shares of the car-maker.

“We expect GM, Ford, and DaimlerChrysler’s Chrysler Group to each lose market share for the month and year, with Japanese brands gaining most of the share,” Levy wrote in a client note. “We expect the traditional Big Three to lose market share again in ’07.”

Full article at link.

[nsap]

Meh. Wall Street only knows what is now. They don't have a clue how GM's new product is going to do.

[Perian]

Originally Posted by nsap

Meh. Wall Street only knows what is now. They don't have a clue how GM's new product is going to do.

They are probably reacting to GM's decision today to lower first quarter production, and possibly a new round of incentives. Ford just fired the first shot with No-Money-Down leasing on the Fusion and F-150 models.

--------------------------------

From Automotive News:

GM executives say they understand the magnitude of the problems. An internal planning memo, which became public in December, describes the automaker as "big but outdated" and warns that GM's "advantages of size and economies of scale are eroding."

The strategy document also says that "lack of flexibility is GM's chief disadvantage."

That issue will loom large this year when GM kicks off labor talks with the United Auto Workers union aimed it clinching a new four-year contract.

For GM, which has not faced a strike since 1998, the negotiations are expected to test a collaborative relationship with the UAW as the automaker seeks to unwind many of the costly obligations written into past contracts.

Those include health-care costs averaging $1,500 per vehicle for GM and a "jobs bank" program that has morphed since its creation in 1984 into a nearly open-ended commitment to pay laid-off union workers.

"What they have to get is major concessions to reduce cost, create flexibility, cut wages, retiree benefits and health-care costs," said Standard & Poor's equity analyst Efraim Levy. "They will also have to do away with the jobs bank."

[mgescuro]

Originally Posted by nsap

They don't have a clue how GM's new product is going to do.

Neither does GM.
Neither do us.

We just cross our fingers and hope for the best.

[jbernie]

I think if we saw the amount of old product still with dealers it would be a better indication of what to expect, I am expecting something in the middle.

The new models are very good, the big worry is if they are too good the old models still need to be sold somehow, so we may see some low profits on sales to individuals or they get dumped into fleets.

The Saturn Aura didn't really replace anything so its ok, the new Malibu causes me concern for sales of the old model. Especially now it is out in the open.

Hopefully the crossovers and the new mid sizers can keep things moving along nicely.

[desmo9]

Originally Posted by nsap

Meh. Wall Street only knows what is now. They don't have a clue how GM's new product is going to do.

I'd like to be upbeat, but I passed a Malibu Maxx this morning and realized it's a nice-looking car I'd consider buying ... even as it's outgoing. The sedan's not all that, but I think the Maxx is as desirable as the new Malibu, which is not even offered in a wagon version (and how many sport wagons does GM sell now?) Without the wagon, and with the Aura sibling already on the market, will Malibu sales go up? Maybe not.

The current CTS isn't exactly a dud ... will the new one usher in any more energy than current one did a few years ago? I'm guessing no. Sales might be OK, but financially-speaking, will the level of anticipated CTS sales put a dent in GM's share or profits? Probably not.

The trucks are good, but in a declining truck market a good effort can only tread water (as the big 'utes have)

Heck, what sort of concepts is GM showing at NAIAS this year that foretell vibrant products in the pipeline? Ford's doing it.

So where's the shining star that oughta have investors praising? The CUVs?

Quite possible that investors were hopeful for awesome stuff in 07, with all the predicted hoopla about how stunning the new stuff is. But many, I'm guessing, are seeing a "competitive" effort that's not everything it's been hyped up to be. When Wall-Street realizes that financial targets are missed, if only by a penny, they sell. I think the same behavior holds on expectations for product targets.

GM might be moving forward ... but so is the competition. Investor confidence is based on the relative successes of GM to others. That's the only way market share moves. GM product that are base hit improvements may not be enough these days.

The sickening thing, though, is that people are leaving GM for completely uninspired stuff in Toyota's stores. That's the part that doesn't add up. I guess people want authentic, and if Japanese-like products are all GM will deliver, people would just assume have a Japanese product. Ford's on the right track. I'm convinced of it.

[tgagneguam]

Originally Posted by mgescuro

Neither does GM.
Neither do us.

We just cross our fingers and hope for the best.

Yes.

It's funny that people eschew recent information - it's relatively poor showing for December and for the year as two clearer examples - in favor of the tired old line of "wait till you see what's coming next."

It's a fairer bet that GM will lose share to Toyota, both in North America and globally, and will continue to underperform Toyota from a financial perspective. Whatever the cause of GM's underperformance, again, it's a pretty fair bet. That's not being biased, it's not being pessimistic, it's simply a good bet.

[lio45]

Originally Posted by nsap

Meh. Wall Street only knows what is now. They don't have a clue how GM's new product is going to do.

Meh. You only know about the secret future stuff that's in the pipeline for GM. You don't have a clue how good Toyota's new products are going to be, you don't have a clue how good Honda's new products are going to be, etc.

It's not like you can really predict anything. Good things are coming at GM, and it's the case at about EVERY automaker... no one is standing still. Meanwhile, GM keeps losing market share despite all of the vaunted product launches of the past couple years. You have to understand that 'Wall Street' has to be realistic.

[nsap]

Originally Posted by lio45

Meh. You only know about the secret future stuff that's in the pipeline for GM. You don't have a clue how good Toyota's new products are going to be, you don't have a clue how good Honda's new products are going to be, etc.

It's not like you can really predict anything. Good things are coming at GM, and it's the case at about EVERY automaker... no one is standing still. Meanwhile, GM keeps losing market share despite all of the vaunted product launches of the past couple years. You have to understand that 'Wall Street' has to be realistic.

Did I say, or even suggest I could do any better? Nope.

[mbukukanyau]

GM is vast

[WishIhadatruck]

This is enough to get depressing. I sure hope it isn't this bad. I try not to focus on this negativity but it is staring me in the face. I can't wait to see a new Malibu in person and I hope it is better than I expect it to be. I don't want to hear how it looks good at a glance but when you get close it is obvious the bean counters made their visit like I keep hearing about the Aura. There are lots of positive things going on at GM but I'm stil nervous and they still have lots of gaps, like super fuel efficient vehicles. Even just a 40mpg hwy basic car like Honda has the Civic and Toyota has the Corolla. They need something to compete image wise with the Prius as well even if it doesn't make money.

[Stéphane Dumas]

Originally Posted by WishIhadatruck

This is enough to get depressing. I sure hope it isn't this bad. I try not to focus on this negativity but it is staring me in the face. I can't wait to see a new Malibu in person and I hope it is better than I expect it to be. I don't want to hear how it looks good at a glance but when you get close it is obvious the bean counters made their visit like I keep hearing about the Aura. There are lots of positive things going on at GM but I'm stil nervous and they still have lots of gaps, like super fuel efficient vehicles. Even just a 40mpg hwy basic car like Honda has the Civic and Toyota has the Corolla. They need something to compete image wise with the Prius as well even if it doesn't make money.

I begin to ponder if those bean-counters act as double agents? They could be paid by "toyonda" under the table to sabotage GM/Ford/DCX. Ok I imagined too much conspiraties but you begin to ponder if......

And one thing who worry me is Ghosn isn't interested for big partnership now but he might be back.........

[LAMRONH]

$29.50, that's my "buy" threshold.
Wish to hell I'd bought at 18. Oh well...Ford is still a bargain, eh?

[mbukukanyau]

I decided not to buy GM and buy its proxie's..
MAN I bough Delphi and less than US$.40cts

[MNdudeswitz]

AHHHHHHHHHHHHHHH WERE ALL GOING TO DIE

Its the freaking stock market people this thing changes so much it makes me dizzy, what goes down comes back up...........well unless your an airline stock but thats a whole other story