Magna chairman says can't sell Opel cars in U.S. OTTAWA, June 2 (Reuters) - Magna International Inc (MGa.TO) is prevented under an agreement with General Motors Corp (GMGMQ.PK) from selling Opel cars in the United States for now, Magna Chairman Frank Stronach said on Tuesday. Stronach told reporters he expected Opel, which a Magna-led consortium has agreed to buy from GM, to break even in three years, and to turn a profit in four. http://www.reuters.com/article/mergersNews/idUSTOD00409920090602
Of course, it's gotta be that way! GM is also getting rid of many dealerships. Imagine if Magna/Opel were allowed to buy all Saturn dealerships, turn around and sell GM's European cars there? It'd be one heck of a coup for a competitor to enter the market on the cheap.
Stronach wants Canada to be the leader in electric/hybrid vehicle production but since the stipulation that Opel can't be sold in North America still exists, the plan is not viable. Canada's economy would greatly benefit if Stronach could somehow rid Opel of this clause.
magna was my first and most profitable trade, back in 1990 when stronach told the bond holders to swap for equity or he'd close shop and retire to austria. they agreed. look where magna is now. in fact, google what his corporate offices in aurora, on, canada, look like. they are the modern day equivalent of an elisabethan palace inside. the place rains money inside its walls. stronach has had plans on the table to create his own car company forever, and this is his chance to do that, by amalgamating opel and leveraging (i.e. acquiring) gm manufacturing plants to create his new brand. those cars will be green and those cars absolutely will be sold into the us market free and clear, under NAFTA. i will bet the farm on this happening. and in fact, i am. right this second. B1000MG.A@34.87 rb.
Very nice Tryk. What do you think of Stronach's break even in three years, profitable in four prediction? If his plans go smoothly Magna could be a very good longer term play.
absolutely they will be profitable, but they won't show it on the books. they have to amortize losses on debt costs over 20 years at least. i'd say 4-5 years is a reasonable timeline to profitability if they have cars on the road in two years, especially for creating a new car company. especially if GM cars disappear or become specialised brands. i don't think the auto industry has a choice. it's produce or die. north america needs smaller, greener cars, and millions upon millions of them to replace the chokers. we needed them in 1973. i think they will have massive investment costs reorganising gm plants, new robotics and entirely new green technology divisions, but that cost will be guaranteed by the canadian government, with unlimited funds for expansion at likely less than prime even as interest rates increase, refinancing of that debt down the road will probably be converted to new equity, new equity will raise even more capital, so on the debt side, magna is in a no lose scenario. forcing the uaw down to a more reasonable wage level will be key, as will funding pensions be a high cost, but with the plants likely located in southern ontario (i.e. taking over the windsor and oshawa truck plants), health care costs will be significantly lower than in the united states. until obama gets the canadian dollar to par so they can equate and integrate the privatization of the heath care systems between the usa and canada into one working model (privatization is as inevitable in canada as is socialisation in the usa. they will meet somewhere in between.), that cost will be the employment killer. but i absolutely believe you will see smaller, lighter, faster, greener, more efficient cars coming out of magna.opel than we would have seen had the magna.opel not been brokered at the highest political levels. we will see opel remain in europe primarily, but we will absolutely see magna cars on the road in north america competing with ford and the asians. and i think they will be immensely successful. i would never bet on stronach. his daughter is as smart as her dad. personally, if i were magna, i'd call up honda and have them send over 100,000 of their new ASIMOs to replace the UAW. those idiots fucked GM right over trying to play hardball with nothing to back it up. i don't see why we need humans to build machines. machines should be building machines. no health costs. replaceable. reprogrammable. no labor disputes. scalable. production capacity can be increased or decreased with the click of a mouse based on real time sales numbers. total robotic automation integrated into the web, across the entire industry, not just at the manufacturing level, to a real time ecommerce model. that's the future. but i digress. they'll probably go AI and kill us all. i saw terminator: salvation last night. amazing movie. made me think of magna for some reason. is that going to come back to haunt me in the future or what? rb.
Magna International Financials (In millions of USD) Income Statement Q1 (Mar '09) Annual (2008) Annual (2007) Total Revenue 3,574.00 23,704.00 26,067.00 Gross Profit 244.00 2,722.00 3,468.00 Operating Income -230.00 328.00 1,152.00 Net Income -200.00 -39.00 648.00 looks like they're profitable to me. it's the gross first, operating second, not the net, stupid. see this chart, back in 1990, where it bottomed out at 1.94, right on the brink of bankruptcy? that was my FIRST trade ever, i was 20. used $5000 in construction work money building houses to buy that stock. and i made a fortune from it, didn't sell until it broke 120. that stock paid my way through college, no student loans. i didn't need to go to harvard. i'd made my killing before even sending out one resume to wall street. that stock paid my brother's way through college, no student loans. that stock retired both my parents. they don't need social security. m,y kids are set for life because of that stock. can you say the same? so hairdresser, no one, and i mean, NO ONE, can disrespect frank stronach and get away with it without looking like a total schmuck. he'll do the same thing with opel, stock will be 100 again by 2011, and i'll be there to remind you when i sell. http://tinyurl.com/quztne