Wagoner's miserable month

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Thread: Wagoner's miserable month

  1. #1
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    Wagoner's miserable month

    Source: http://money.cnn.com/2005/10/27/news...oner/index.htm

    Wagoner's miserable month: Dismal sales in North America and an SEC investigation have pummeled GM's stock price. What's next?

    October 27, 2005: 1:46 PM EDT
    by Alex Taylor, Fortune senior editor

    NEW YORK (Fortune) - October is shaping up to be the worst month in a particularly awful year for General Motors and its chairman and CEO Rick Wagoner -- and it's not even over yet. The cascade of ill tidings has pummeled GM's stock price once again and renewed suggestions that the world's largest automaker may have to seek the protection of bankruptcy.

    GM's latest blow is the announcement that the Securities and Exchange Commission has issued subpoenas regarding investigations into GM's pension accounting practices and its relations with auto parts supplier Delphi. After Delphi declared bankruptcy earlier in the month, GM disclosed that it could owe as much as $11 billion to cover pensions for Delphi employees who used to work for GM (Research).

    The subpoenas indicate that the SEC has upgraded an informal probe of GM's practices into a formal investigation -- not exactly encouraging news, though GM says it has done nothing wrong.

    More distractions and added legal bills are not what Wagoner needs these days. Only a week ago, GM reported that it lost $1.6 billion in 2005's third quarter, mostly because of another dismal performance in North America, where GM has lost more than $4 billion this year.

    With additional losses likely on the way because of high oil prices, falling SUV sales and a host of other factors, Wagoner says that GM is at "a critical juncture in our company's history."

    He's got a plan to bail GM out but so far it hasn't produced results. For instance, his deal to cut GM's health care expenses by $3 billion annually has been viewed skeptically because he hasn't announced many details and acceptance depends on agreement by members of the United Auto Workers, who haven't always acted kindly towards GM.

    Watching all these developments carefully is Kirk Kerkorian, the Las Vegas billionaire, who increased his GM stake in October to nearly 10 percent, worth about $1.5 billion at current prices. Kerkorian started buying GM stock earlier this year and his presence creates another headache for Wagoner, who now has a big, impatient investor looking over his shoulder with the probable intention of agitating for a seat on the board of directors.

    When he spoke with FORTUNE in August during his last extensive interview, Wagoner claimed that, rather than feeling beaten down by the cascade of woeful news, he was energized by it. "There's nothing like a good, tough battle to raise the adrenaline and get everyone focused," the onetime Duke basketball player said. "This is crunch time." But he admitted that company had let some issues fester without addressing them, and added "we don't have a lot of time."

    SEC investigations, Delphi bankruptcy, dismal earnings, Kerkorian -- could it get any worse? Actually, yes. Next week GM is due to announce October vehicle sales and they are expected to be dismal. After blowout months in June and July because of lot-clearing employee price promotions, GM sales have plummeted this fall.

    For one thing, the fire sale pulled ahead buyers who had been intending to make a purchase later in the year and also left dealers short of inventory. Meanwhile, the spike in gasoline prices around Labor Day spooked any remaining customers, especially those considering a big SUV.

    Deutsche Bank analyst Rod Lache says he expect GM's sales to fall 25 percent compared to a year ago. That would give GM an October U.S. market share of 20.5 percent -- poisonous for a company with high fixed costs that expects to maintain a market share closer to 30 percent.

    As recently as last week, Wagoner was saying "we remain bullish on the long term prospects of the auto industry in the U.S." He may be rethinking that now.
    "La vita come un albero di Natale..c' sempre qualcuno che ti rompe le palle!"

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    Re: Wagoner's miserable month

    I'm somewhat amazed that a person can perform so poorly in his position for such a relatively long period of time and not be held accountable. I'm beyond not impressed with Wagoner and all that he's done - or not done. The sad part is is that the Company seems fit to generally promote people from within, with or without the clear performance that would merit such promotions.

    Again, I recall a statement that when Wagoner headed N.A.O., it would be unlikely that he would be promoted to head the Company if US share fell below 29% (remember those ridiculous pins?). Well, I believe it fell to 28.3%, yet he now heads the Company. So what part of the poor performance wasn't clear to the Board come promotion time? While 29% is admittedly a somewhat random metric, he still did not deliver on his promise. What gives?

    I'm all for leveling UAW member compensation to reasonable, real-world levels, but management needs to make some tough fat-trimming decisions, too. Once the dust settles with the UAW, the UAW is no longer going to be the convenient blame for missed profit projections and decreasing share. Somehow, though, I suspect that something else beyond management will blossom as the root of GM's ills.

    How absolutely frustrating!

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    Re: Wagoner's miserable month

    I agree. With Wagoner's failing for years at whatever job he's held, there's no reason to think his performance will change. The same is true of the board. So it's up to the stockholders. Where are they?

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    Re: Wagoner's miserable month

    Wagoners Miserable Month? Shouldn't that read Wagoners Miserable Years. This bad news is nothing new. Every week, we're hearing more & more bad news. The ONLY reason GM's stock is as high as it is right now is because of Kerkorian. The ONLY reason any of their newer vehicles are any good is becuase of Lutz. Wagoner needs to bust some a$$, not only his own, but that of some other people as well.
    Watch The 4400 or suffer the fate of a terrible future.

    I'm a new VW Whore and owner of a 71 VW Super Beetle Hidden Content .

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    Re: Wagoner's miserable month

    Hopefully Wagoner can get GM back on track. I am confident that GM will make it through this hard time. And it's also impertant that GM makes very fuel efficient cars because that's what the market is all about right now. Buying or worrying about the gas mileage of a car. And GM needs to advertise their new vehicles such as the new Chevy Impala ,Pontiac Torrent and the Chevy HHR more better than the way they advertise them currently because I believe that will increase their vehicle sales. GM also needs to fix the rest of it's financial issues, And that's being worked on right now.

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    Re: Wagoner's miserable month

    You can make it GM!! Don't give up!! You can make it GM!!

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    Re: Wagoner's miserable month

    Wow, baseball season is over but the boo birds are still here!

    Wagoner is around, and is expected to stay around, because the Street and the Board both think he's one of the better executives in the business.

    The question for critics: who would you bring on to replace the Rick?

    Running GM is not just a product game; it's not just a finance game; it's not just a labor relations game. It's running one of the biggest corporations in the world. The list of qualified candidates is kind of short.

    Look at the troubles Billy Ford has gone through in the media trying to find a CEO. He's basically been holding open casting calls for three years, and still hasn't found anyone.

    Think it's any easier for the top spot at GM?

    Miller will be ready and willing in two years; right about the time the Street expects GM to be in Chapter 11.

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    Re: Wagoner's miserable month

    Quote Originally Posted by Motownr
    Wow, baseball season is over but the boo birds are still here!

    Wagoner is around, and is expected to stay around, because the Street and the Board both think he's one of the better executives in the business.

    The question for critics: who would you bring on to replace the Rick?

    Running GM is not just a product game; it's not just a finance game; it's not just a labor relations game. It's running one of the biggest corporations in the world. The list of qualified candidates is kind of short.

    Look at the troubles Billy Ford has gone through in the media trying to find a CEO. He's basically been holding open casting calls for three years, and still hasn't found anyone.

    Think it's any easier for the top spot at GM?

    Miller will be ready and willing in two years; right about the time the Street expects GM to be in Chapter 11.
    Right..if GM doesn't turn it around..and around right now then we will be reading about how GM filed for chapter 11 in 2 years

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    Re: Wagoner's miserable month

    There's a really interesting article in the current issue of Barron's about GM.

    Basically, it says that the Street gives GM a 50/50 chance of entering Chapter 11.

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    Re: Wagoner's miserable month

    Quote Originally Posted by Motownr
    Wow, baseball season is over but the boo birds are still here!

    Wagoner is around, and is expected to stay around, because the Street and the Board both think he's one of the better executives in the business.

    The question for critics: who would you bring on to replace the Rick?

    Running GM is not just a product game; it's not just a finance game; it's not just a labor relations game. It's running one of the biggest corporations in the world. The list of qualified candidates is kind of short.

    Look at the troubles Billy Ford has gone through in the media trying to find a CEO. He's basically been holding open casting calls for three years, and still hasn't found anyone.

    Think it's any easier for the top spot at GM?

    Miller will be ready and willing in two years; right about the time the Street expects GM to be in Chapter 11.

    Buickman! At least he has a plan!!!

    Wagoner is a complete failure! When we look back in time, we will realize that he has been one of the worst CEO's in GM's history!! The man that replaces Wagoner will be a success!! How could it get any worse?!!

    We need someone that can rally the troups! Bring back the customers, work with the UAW, listen to the needs and wants of it's dealer body and most of all has a "true" plan! A plan to "Return to Greatness"!!!

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