I've tried not to post anything concerning the GM situation because it seems a lot of people have positive feelings for old American companies. However, let's look at the numbers. GM market cap right now: ~ 500 Million dollars. Intel market cap ~ 90Billion, microsoft market cap ~ 180billion, Google market cap ~ 130billion. Why is the government continuing to throw 10's of billions of dollars at a company worth less than a billion dollars? Even if GM rights itself and builds it's worth back up to a few 10's of billions, that will still not justify this massive investment. Shouldn't the gov't be investing to keep the new economy, high tech companies mentioned above running well instead? I say this because thirty years ago no one would have expected each of the US big three automobiles to be in or near bankruptcy but here we are. With China, India, and other countries investing heavily in education and technology, who is to say that our high tech companies won't be next to struggle? I think the 10's of billions to bailout GM is being mostly wasted and would be better spent keeping the industries that we need for the future strong and competitive.
I'm surprised that no-one is mad about this. Obama is throwing away another $50 -$60billion. Remember how mad everyone was about govt. procured $500 toilet seats and $700 hammers? Where is those peoples' anger now????? hypocrites or retards, I guess.
Stating that a market cap is somehow an accurate representation of a company's worth shows what your level of experience is. The reason the govt. is investing so much in GM is because they are worth much more. The people writing these checks have more information than you or I do, and even I have enough date to value GM ~110 billion. A tip for people: if you think yahoo finance or google is going to give you all the information you need to accurately profile a company's books go to the nearest toilet and just flush your money now.
GM bankrupt and the stock is up 20%+ I cant wait for the new GM to emerge, it will be the greatest profitable company in history, everything will go right for them, people will start buying American cars again and everything will be great. Jobs will be created once again and the economy will thrive.
I saw it on elitetrader and someone suggested the GM plants cost 100's of millions because they can switch them to tank production within days. Great theory. You need GM
Based on that statement, it looks like the only one flushing money down the toilet is you. GM is not an asset, it is a liability due to UAW. Their brand name is a joke. The only thing worth anything significant at GM is their plant, property & equipment. Which would require a a full dissolution of the company to acquire, in order to get the UAW away from it. Well, there is that wonderful inventory of GM cars. Maybe $5 billion liquidation value there, pretty much the only way that inventory will move.
The UAW didn't cause this - the management at GM that put up with the UAW for so long did. GM's public assets this morning were 83 billion with around 170B in liabilities. With a single stroke Obama has separated all those liabilities and left the assets alone. Forget the product already produced - GM's worth is not in it's cars but the infrastructure, reach and capacity it has. For the record: I don't like all GM products, but the vette and new CTS are sharp. I would rather have a new CTSv over any bmw or mercedes right now.
The point you are missing, karl, is that a company's worth is not determined by how much they produce, but how much profit they make. Any company, regardless of whether it has a book value of $200 billion, won't receive that for the sale of it's assets unless those assets can produce a profit. I've heard stories of gov't computer systems that were built for 10's of millions of dollars that didn't even resale for $100,000 only a few years after they were initially installed. Don't you think if GM's REAL value was $200 billion, another company would have stepped up and bought them for any discount? ANY country with manufacturing can make cars. It is not rocket science. However, Intel and AMD are the only two companies with the proprietary know how to volume produce viable computer CPU chips. Googs is the only company with the proprietary search tech to keep them number 1. Microsoft has a substantial edge with their OS software. And the list of America's advantages in the tech fields goes on and on. Yes, a scaled down GM will bounce back to some extent. But baby GM is still GM. They clearly have no edge, except the "Buy American" slogan, to differentiate their product as better than foreign cars. High tech is the area U.S. has a clear edge right now. We should protect that edge.
I disagree. A company is worth what value they represent, not what their profit is. Profit of a public company dictates market capitalization and shows up in the multiplier. The fact that market cap doesn't include all ownership of a company should be your first clue.