patrick.net

I would take a serious look at it. Five huge factor from the old GM vs. new GM

1) dispose of unprofitable brand. The new organization will be more profit driven.
2) erased most of their debt obligations. They got a fresh start will their balance sheet.
3) union and pension concession.
4) Negotiated more favorable contracts with dealers and vendors overall.
5) Unit sales off 2008/2009 lows. Car replacement cycle in 2011-2015 and a better operating environment prospectively.

The point is you can't compare old GM to new GM. Management, balance sheet structure, business structure and operating environment are different and uncomparable. I didn't bother to look at Teslar Motor, but GM has some potential.

In general, I'm actually very impressed what the current management has been able to accomplish to clean out the balance sheet and 2B quarterly profitable currently. How much the government has lost is irrelavant to the investment case. The IPO places a market value of GM around 40B-45B, a 10-20% lesser value than Ford to use as a benchmark.

SF ace says

The new organization will be more profit driven.

That's what I'm worried about. Short term profit emphasis is what got them into trouble in the first place. They pandered to the SUV craze because it was profitable to sell trucks at car prices, and look where that got them. .

No technology, no energy efficiency, no design skills.

Tongue halfway in cheek, but no more than halfway.

From what I read a long time back, they always sold SUV's and that was always their bread and butter. They basically "waited out" recessions, to make more SUV's. I think the crazy just helped them out quite a bit towards the end.

As for all of the other issues, I blame near retiring union workers more than anything, by the time they are in their last 10 years, they simply want to get out, without rocking the boat. All their designers seemed to redesign the same thing over and over. I blame management for not doing anything about it.

pkennedy says

From what I read a long time back, they always sold SUV’s and that was always their bread and butter. They basically “waited out” recessions, to make more SUV’s. I think the crazy just helped them out quite a bit towards the end.
.... I blame management for not doing anything about it.

To run a successfully company, all of your product lines need to be successful, you don't carry unprofitable at the expense of successful product lines. If they couldn't make a small car profitable, make the changes you need to to make it profitable or they should should have dropped them entirely. Basically they made money losing small cars to get the overall GPM average up so they could make more profitable big trucks and SUV's. It was this drag on profits that really hurt them in the long run. Also the sweetheart deals the unions negotiated over the years didn't help much either. They didn't clean house on the management side of things, sooner of later they are doomed to fail again. It might take another 20 years for things to build up, but they are not result of natural business selection, they are the result of government bailouts.

Your point is that they made the small cars for a reason, therefore they were necessary. A factory is an expense you could do without, but if you're manufacturing, you're kind of stuck with it. Same with these, they wanted to sell huge SUV's and they had to deal with legislature that penalized them. They could either fix the SUV, or make smaller cars with 0 profit. They chose the smaller cars, for a variety of reasons it was probably a good route to take.

There used to be over 100 car companies in the US, the fact that there are only 3 now says something. They did natural selection. This time they weren't, but of course if they weren't bailed out, there would be 0 car companies in the US, and the US would never again have a car company because the cost of starting that business is too high for anyone.

If they start down a new path, with more "useful" R&D I could see them doing pretty well. If they spend the same R&D to produce the same crap, obviously they are going to fail. Hopefully the VOLT will do something for them, along with new management.

The most important detriment to the GM investment case is the US holding 40% of the shares after the IPO. If the US is willing to sell the shares in the 20's they will sell the shares in the 20's and definitely the 30's, a billion shares you know are waiting to be sold is not a recipe for buying. Everyone knows this therefore the shares will not amount to anything until the government divesture is complete or the (Leaf and the new Chevy becomes a hit)

The bailout left the unions intack too much for my investing tastes. Until the union gets the boot completely I'd stay away.

TechGromit says

The stock that was worth $80 a share in 2000 is now basically worthless, and is now trading at .26 a share on the OTC market under the symbol MTLQQ.

That stock is paper only. It doesn't represent a company at all. There's nothing to back it up, and I'm surprised that people are stupid enough to trade it. It'll never go up.

People are stupid.

The company is making money, that is what matters at the end of the day. How much they waste, how terrible their products are, they're making money. I'm always amazed at how some of these companies stay in business, but it's the huge amounts of money they deal with, they only need to keep a bit of it to make a profit.

I think SFace is probably right here, the government wanting to sell all those shares will keep the stock from moving. It will require a huge number of buyers to buy out the government.

I looks like it is going to be 478M shares at 33 a piece and another 4B in convertable preferred shares. Me, no thanks! In fact, it may be a prospective short if it pops the first day.

If I was an institution, I would long the convertable preferred shares (caveat, I do not know what is the conversion rate subsequenty) and short the commons at the right price. It is the only play that makes sense with commons IPO around 33. Most people who buys convertable preferreds also short the commons at the right price.

Most blue-chip companies aren't even going for $33/share, its inflated....

remington, price alone says nothing about the value of the shares. Market value is a function of price per shares and # of shares outstanding.

I think Buffets company is around 150K per share, but they have only limited share outstanding. Contrast that will Sirius satellite radio which is a buck something but have plenty of shares.