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Daniel Akerson, GM's new CEO

Akerson pushed GM to boost production of the highly anticipated upcoming Chevy Volt electric vehicle.  (Source: GM-Volt)
Questions of leadership remain, but the company does appear to be recovering

Amid a round of disappointing earnings reports from Cisco and others, General Motors actually had some good news to report yesterday.  Following it's May report of an $865M USD profit -- its first profit since Q2 2007 -- GM has posted an even bigger profit, announcing a net income of $1.3B USD on a revenue of $33.2B USD.

GM is also sitting on a stockpile of $32.5B USD in cash -- leftovers from bailouts received from the U.S. and Canadian governments, in addition to revenue for the sales of its laggard brands like Hummer.

That was the good news.  The somewhat troubling news for GM was its announcement that CEO Ed Whitacre was stepping down.  The quiet Texan had masterminded the company's turnaround drawing on his long history of success as a senior executive, and eventually CEO at AT&T.

The news reportedly stunned GM insiders.

Equally surprising, perhaps, is the choice for his successor.  Whitacre will be replaced by former Nextel CEO Daniel Akerson.  Akerson, currently a private-equity firm where he is a managing director with the Carlyle Group, currently serves on GM's board.

Akerson is a firm proponent of electric vehicles.  As public buzz and anticipation grew about the 2011 Chevy Volt, Akerson pushed hard for GM to increase production 50 percent.

Some are optimistic about the appointment.  As a board member, Akerson showed he wasn't afraid to sack people, pushing for Henderson's resignation.  Steven Rattner, former head of the White House auto task force, comments, "He's a no B.S. kind of guy, just like Whitacre.  His whole operating style is the antithesis of the old GM. It is hard for me to imagine a better choice."

But some fear that he's too much of a financial man and lacks the necessary experience to lead GM optimally.  Paul T. McCartney, a managing director of Heritage Search Partners Inc. in New York comments, "[His whole career] "has been focused on making the numbers as best as you can and [then] 'let's move on with the company in some other form.'  [He isn't] going to lay out the strategic future of General Motors."

From a purely statistical perspective, the odds merely of Akerson keeping his position seem slim -- GM has had four CEOs in just a year and a half.

However, it's critical that Akerson prove a decisive leader.  GM is on the verge of announcing a initial public offering of stock to repay the U.S. and Canadian governments.  That offering has now been put on hold as account executives responsible for it reportedly race to change the documentation -- something which gives you the idea of how unexpected Whitacre's departure was.

If Akerson can pull together and repay the government via a successful offering he will offer vindication to Democratic President Barack Obama and his predecessor, Republican President George W. Bush, who both chose to bet on GM, bailing the company out at the taxpayer's expense.  Such a success would certainly elevate Akerson into the annuls of automotive executive history.

However, if the IPO disappoints and GM falters, don't be surprised if Akerson becomes the latest GM chief to see the door slam behind him.



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Well duh
By FITCamaro on 8/13/2010 10:04:27 AM , Rating: 3
If I had the American people pay off all my debt I'd be doing a hell of a lot better too.




RE: Well duh
By mrdeez on 8/13/10, Rating: 0
RE: Well duh
By FITCamaro on 8/13/2010 11:37:42 AM , Rating: 5
All the money loaned to GM before their bankruptcy was written off as part of the bankruptcy and will not be repaid. Only the money loaned to them since the bankruptcy will be repaid. It was the money given to them before bankruptcy that paid off all their debts. And the money "repaid" so far has been with more money they borrowed.

You can try to justify it any way you want.

The federal government broke laws in what was done. It took a company that is owned by investors and gave it to people it likes and itself. Those with a legally binding claim to be the first compensated were snuffed off as "greedy". Not to mention the scandal with the closing of dealerships that were profitable but owned by people who contributed to Republicans.

If GM failed, then it would have been sold off in pieces to other companies. If it wasn't, well that's what happens when a company follows a bad business model. They let the unions control them and drive the costs way over their competitors. The federal government has no authority to take over industries, not that I expect drones like you or those in Congress and the White House to care about that.

Would the country have suffered if GM had failed? Yes. But short term suffering is necessary at times to prevent larger problems down the road.


RE: Well duh
By MadMan007 on 8/13/10, Rating: -1
RE: Well duh
By mcnabney on 8/13/2010 10:31:43 AM , Rating: 5
I know you would rather remain a trolling idiot, but I'll try to clue other readers in.

GM was going to go bankrupt 18 months ago. It could either be a reorganization or a liquidation. In order to do a reorganization a very large financial institution would need to issue loans during the process. This is normally not a problem for potentially viable businesses, but in this case the business was very large, had capital-intensive operations in many countries, and we had this thing called a banking-crisis going on. So there was no non-governmental organization that had the financial liquididity and temerity to underwrite a reorganization. That is why the US and Canadian governments stepped in and a reorganizing bankruptcy took place.

This is what actually happened during the bankruptcy:

Equity investors (stockholders) got nothing
Bondholders received a fraction of their current value
AP received negotiated payments for prior services/materials provided
Debts to labor organizations were not paid out, but were instead converted to new equity shares.
Underwriting costs borne by the US and Canadian governments were converted to new equity shares.

That is what happened. If the governments didn't prevent it and GM went into liquidation the AP would have gotten nothing and bondholders would have gotten even less. Oh yeah, and a million jobs would be lost in the following 3 months. That would have bankrupted hundreds of smaller firms that do business with GM (and Ford, and others) which would have rippled across the nation. What was done was done to give GM a soft landing as a smaller and hopefully more competitive business. The options to that were seriously unfathomable.


RE: Well duh
By MPE on 8/13/2010 10:41:13 AM , Rating: 4
STOP IT!!

You are making too much sense. It does not fit my political narrative that has been given to me.


RE: Well duh
By Quadrillity on 8/13/2010 11:15:01 AM , Rating: 5
Or....

GM would have been chopped up and divided among the other big moto comanies, a lot highly paid broom pushing union workers would have lost their job, and we would have been WAY better off down the road after fully recovering from the initial losses.

Failing business should fail, otherwise the free market is useless. NO business should be so integral and large that it would collapse an entire economy. I never keep all my eggs in one basket, I have 3 (count that right, 3) backup plans if my current (career) job fails me.

It's time that people learn to 1. have backup plans and 2. Let free market take it's course.

What's next? McDonalds goes belly up and we (the taxpayers) bail them out too? Where do we draw the line?


RE: Well duh
By FITCamaro on 8/13/10, Rating: 0
RE: Well duh
By Quadrillity on 8/13/2010 11:50:42 AM , Rating: 2
exactly... I don't understand for the life of me why this growing trend of nanny government is getting more popular every day.

If anyone reads the U.S. constitution, they should see that the majority of the document is describing what the government CAN NOT do. I don't know which is worse, too much control, or too little.


RE: Well duh
By inperfectdarkness on 8/13/2010 12:00:06 PM , Rating: 2
all of the small business that provide "feeder products" to GM for vehicle construction would eventually either go under or (more likely) find new life in contracting for whichever mfgs move in to fill the void that GM leaves behind.

the market can't tolerate a void; something will fill it. propping up GM is only artifically floating a company that should go under. when UAW goes under (along with their glut of $60/hr workers who can contractually only work 2-3 hours per day) the market will be much better off for it.

toyota has it right. $15/hr for unskilled labor--NON UNIONIZED--is sufficient.


RE: Well duh
By Reclaimer77 on 8/13/10, Rating: -1
RE: Well duh
By FITCamaro on 8/13/2010 12:23:33 PM , Rating: 1
Not even really a joke today.

He tried to exempt menthol cigarettes from the cigarette tax increase. Who smokes the most menthols?

Every major piece of spending legislation passed in the past 20 months has had provisions to give precedence to minorities. Even the health care bill had parts in it to effectively create affirmative action for medical schools.


RE: Well duh
By Masospaghetti on 8/13/2010 12:53:31 PM , Rating: 4
quote:
He tried to exempt menthol cigarettes from the cigarette tax increase. Who smokes the most menthols?


If what you are hinting at is true, wouldn't he really just be condemning them to a life of disease and premature death?


RE: Well duh
By danrien on 8/16/2010 9:57:44 AM , Rating: 2
quote:
If what you are hinting at is true, wouldn't he really just be condemning them to a life of disease and premature death?


Hahaha that is good.


RE: Well duh
By ClownPuncher on 8/13/2010 3:00:35 PM , Rating: 2
He must be part Mexican too.


RE: Well duh
By hr824 on 8/13/2010 3:49:19 PM , Rating: 1
You think that was funny eh? Not to surprising though, racist always think their racist jokes are funny to everyone. I assure you that I don't secretly think your so called joke is funny at all.


RE: Well duh
By Quadrillity on 8/13/2010 4:07:54 PM , Rating: 1
race jokes are race jokes... It's obvious he wasn't being offensive if he points out the fact that he is making a joke about it. Too many people get offended when others make stereotype jokes. Lighten the f*** up dude...

I'm white. Go ahead and make all the white jokes you want to, and I'll sit back and enjoy them because I bet none of them apply to me. See how easy that is? And I'm being serious, send your best white jokes.


RE: Well duh
By Reclaimer77 on 8/13/2010 5:25:32 PM , Rating: 5
quote:
You think that was funny eh? Not to surprising though, racist always think their racist jokes are funny to everyone. I assure you that I don't secretly think your so called joke is funny at all.


Nah I just knew when I made it some miserable joyless uptight loser such as yourself would bite. Ahhh, you made my day. Even after I made it blindingly obvious what I was going for, you still took the bait.

I notice you didn't make a post similar to this when everyone was making fat jokes in that other article. Why is it ok to pick on one segment of people and not another? You're a bigot, that's why :)

I just blew your mind. Now go ponder your misplaced judgment.


RE: Well duh
By hr824 on 8/13/2010 11:21:52 PM , Rating: 1
Who took the bait? That was easy, predictable, and fun all at the same time.


RE: Well duh
By MamiyaOtaru on 8/15/2010 4:36:39 PM , Rating: 2
LOL I TROLL U


RE: Well duh
By mindless1 on 8/13/2010 12:17:39 PM , Rating: 5
It is naive to think they could just be "chopped up and divided".

Yes auto sales would increase for the other manufacturers, IF you ignore the points made that other companies would go bankrupt too.

The US is never "way better off" losing GDP. You lack a basic understanding of reality, while the government plays the shell game with money all the time, in the end it is for a purpose, to keep people productive. No matter what else happens it is crucial to keep the citizens producing valuable goods.

Free market depends on that too, you have merely taken an oversimplified view without seeing that the "free market" environment depends upon the very goods and services you discount as being ok to lose. Who is next? You like the foreign automakers more, the ones that had their government subsidizing them all along so their bottom line artificially looked better than it really was?

The decisions made were based on expert review, not arm-chair quarterback knee-jerk reactions like yours.


RE: Well duh
By Reclaimer77 on 8/13/2010 12:21:26 PM , Rating: 2
quote:
The US is never "way better off" losing GDP. You lack a basic understanding of reality, while the government plays the shell game with money all the time, in the end it is for a purpose, to keep people productive. No matter what else happens it is crucial to keep the citizens producing valuable goods.


Except for one key fact. A large company like GM, failing, consumes more GDP and resources than they produce. That's why Chapter 11 exists. Jesus Christ, and I the only one in here right now that knows what that is!!??! I feel like I'm taking crazy pills!

quote:
The decisions made were based on expert review


As with everything this Administration does, the decision was based on politics. And nothing more.


RE: Well duh
By FITCamaro on 8/13/2010 12:26:40 PM , Rating: 2
Dude if you're ever in the Charleston area, I'm buying you a drink.


RE: Well duh
By Reclaimer77 on 8/14/2010 7:25:34 PM , Rating: 2
Hell it's only 3 hours away. Sounds like as good a place as any to take my gf to on a weekend trip :)


RE: Well duh
By FITCamaro on 8/15/2010 10:43:30 PM , Rating: 2
Just lemme know. Hit me up on gmail if you feel like making the trip.


RE: Well duh
By Quadrillity on 8/13/2010 12:45:24 PM , Rating: 2
quote:
It is naive to think they could just be "chopped up and divided".

Hoping on that is a hell of a lot better than throwing money at a failed company. MY money.
quote:
other companies would go bankrupt too.

Cry me a river, "eggs in one basket" applies here.
quote:
No matter what else happens it is crucial to keep the citizens producing valuable goods.

You are right, and this ONLY works efficiently when the free (conservatively regulated ) market is allowed to exist. You are somehow implying here that I actually believe that a utopian free market exists; it doesn't. So get over yourself.
quote:
The decisions made were based on expert review, not arm-chair quarterback knee-jerk reactions like yours.

I am sick and f****** tired of the whole "you don't have a Ph. D, so you are stupid" type mentality. I am smart enough to realize that forcing citizens to support a dying company is without a doubt the worst idea possible. I'm sorry that you are too shallow to see that government almost always has a black thumb. They F' up everything they touch.

I guess my traditional views of a constitutional government that was set up by our founding fathers is just too radical nowadays; shame on me.


RE: Well duh
By Solandri on 8/14/2010 3:41:33 PM , Rating: 2
quote:
It is naive to think they could just be "chopped up and divided".

I have no idea how this got rated up to a 5.

When a business files for chapter 7 bankruptcy (liquidation) and the parts get chopped up and sold, how much of it is bought by competitors for reuse and the amount you'll get from the sale is proportional to how functional the business was. If it was pretty close to breaking even but just couldn't make it, the parts will sell for near the full value of the business and nearly 100% of its parts will continue to live on under new owners. If it was a terrible scam shop with no hope of every becoming profitable, the parts will sell for near nothing or won't sell at all, and very little will live on.

It's contradictory to argue on the one hand that the business was worth saving, and on the other hand that it couldn't have been chopped up and sold. If you believe the business is worth saving, then by definition you believe it could have been chopped up and sold. If you believe it couldn't have been chopped up and sold, then by definition you believe the business is not worth saving.

Essentially, you are arguing that the parts are worthless but the whole has tremendous value. That makes absolutely no sense.


RE: Well duh
By Reclaimer77 on 8/13/2010 11:54:47 AM , Rating: 2
quote:
In order to do a reorganization a very large financial institution would need to issue loans during the process.


Apparently if the same lie is repeated, it's true. No, Government backed bankruptcy does not need a bank to back it. I'm not going to bother to sit here and list all the ways the Obama administration strayed from the already established rules and procedures for this practice. But suffice to say, that isn't what happened.

quote:
So there was no non-governmental organization that had the financial liquididity and temerity to underwrite a reorganization.


Again, non-government financial institutions don't underwrite Government assisted bankruptcy anyway. They haven't since 1966. Stop with this red herring. It's called Chapter 11, look it up.

Almost every major airline in this country, at one point or another, faced extinction. They were forced to seek relief by filing under the U.S Bankruptcy Code to get out from various contracts (debt, union etc.) that have overly burdened the company. GM could have gone Chapter 11, have the government provide debtor-in-possession financing and guarantee the warranties and it would have been the better solution. GM emerges leaner and with a better cost structure.

Can you explain to me why this has worked for the airlines, and countless other industries, in the past but it wouldn't work for GM?

quote:
TextOh yeah, and a million jobs would be lost in the following 3 months. That would have bankrupted hundreds of smaller firms that do business with GM (and Ford, and others) which would have rippled across the nation.


Oh please. Apparently you actually want us to believe GM would have simply went bankrupt and ceased to exist? That was never going to happen either way. Stop with the fear mongering and job loss scare tactic. And where in the Constitution does it say it's ok to buy private industry if lots of people might lose their jobs? Where was that power given again? I'm having a hard time finding it.

I don't think you understand. The issue here isn't what happened, it's HOW it happened. Obama wanted to make sure the unions, which helped get him to the White House, were protected. GM would have been able to TRULY restructure and shed debt then. But instead we're left with a bastardized car company that's owned by the Government, ran by the Unions, and the American people had to eat the debt.

Your whole argument is built upon the Strawman that GM would have been "liquidated". That's a myth perpetuated by the Left. Again, look up Chapter 11.


RE: Well duh
By Phynaz on 8/13/2010 1:27:49 PM , Rating: 2
You are going to actually mention the airlines?

Guess who their pensions were offloaded to? The US Government.

So much for your argument.


RE: Well duh
By Reclaimer77 on 8/13/2010 3:31:15 PM , Rating: 3
quote:
So much for your argument.


The "argument" was that the airlines used Chapter 11, and the Government did NOT buy their companies and own 60% of their shares etc etc.

How on Earth is a pension offload destroying that fact? In your smug attempt to be cute, you still fail. Ever heard of the quasi-government agency called the Pension Benefit Guarantee Corp? Sounds like you haven't, so that explains why you don't understand why the airlines dumped those pensions in the first place.


RE: Well duh
By charrytg on 8/13/2010 7:24:19 PM , Rating: 2
Personally, I preferred the post which detailed what was going on, not the one which focused on insulting the previous post, and going on tangents.


RE: Well duh
By FITCamaro on 8/13/2010 11:55:55 AM , Rating: 2
Yes and what is the result of all this?

A company that is now in large part owned to significant degree by the very people who contributed to its downfall. Could GMs management have gotten rid of the UAW at some point along the way to improve their business? Yes. But I'll bet you'd have been there knocking them for being a greedy corporation who doesn't want to pay people what they're worth.

GM will be a puppet of the federal government for years to come. Look at all the banks that were given money. Many are not being allowed to repay in full the money they were(some forcibly) given. Why? The government says for stability.

Also it was not merely a bankruptcy. The US government didn't just loan them money in order to do a reorganization. The federal government went in with clear goals to reshape the company the way it wanted it to operate. They didn't just let the company work out what was best for the long term health of the company. They repaid the UAW for its support of Obama by giving them the power to have a rather large say in the companies operations. As well as installing a CEO that would do whatever they wanted, telling them to eliminate dealerships that didn't support them, and giving themselves majority ownership.

Whether I like the outcome of a government action or not, the question that must be asked with anything the government does is "Does the US Constitution give the federal government the power to do this". The answer is clearly no in this instance. And past mistakes do not clear the way for actions today.


RE: Well duh
By Motley on 8/13/2010 1:16:14 PM , Rating: 1
Nothing you've said (even if you want to believe it's true) changes the fact that what the parent said is true.


RE: Well duh
By Quadrillity on 8/13/2010 1:20:07 PM , Rating: 2
So you think tax money should be used to violate our established laws and regulations of a free market economy? You think it's the governments job to babysit?


RE: Well duh
By Lerianis on 8/13/2010 5:54:41 PM , Rating: 1
The free market doesn't work without regulation. Some of regulation is (when speculators are driving up prices illegitimately) to use government dollars to stave that off.

The free market simply DOESN'T WORK in the real world. In a perfect world, it does but in the real world, we have too many people out there who are willing to scam other people out of their money for it to work.

There comes a time where you have to realize that some nationalization/socialization is necessary and good for the 'free market'.


RE: Well duh
By Reclaimer77 on 8/13/2010 6:10:12 PM , Rating: 3
quote:
The free market simply DOESN'T WORK in the real world.


What? It's been working since day one of this countries founding. Since the dawn of the Industrial Revolution. And beyond. How anyone living in this country can say it doesn't work, while reaping all the benefits of it, is beyond belief.

If anything only works in a "perfect world" it's socialism.


RE: Well duh
By MadMan007 on 8/14/10, Rating: 0
RE: Well duh
By LoweredExpectations on 8/14/2010 2:56:22 AM , Rating: 3
Every successful economy is a capitalist-socialist hybrid. There isn't a purely capitalistic economy anywhere on earth that isn't humanized through some degree of socialist regulation.

The free market as the corporate fanboys and market fundamentalists understand it hasn't existed since 13 year-old kids slaved for room and board in sweatshops in Victorian England. Nothing like a bloody revolution to convince the guys with the money that maybe they'd live longer if the people who worked in their factories had a few rights.

People who think businesses will always do the right thing if left completely alone amaze me. The people who worship business are also the same people who accuse everybody else of immorality and stupidity; aren't companies just groups of people who've banded together to pursue profit? how does that make them suddenly so saintly and virtuous that they can always be blindly trusted to do the right thing? You'd have to be pretty blinkered to not see the damage businesses can do if left unregulated.


RE: Well duh
By FITCamaro on 8/14/2010 9:35:11 AM , Rating: 2
No one is advocating for a complete lack of regulation.

But to say we have a free market today(as Obama often has) is like saying I'm free to do whatever I want when there's a guy with a gun pointed at my head watching every step I make, ready to pull the trigger if I do something he disagrees with.

Is some regulation good? Yes. Is the level there is today good? No.

Businesses are weighed down by the bureaucracy they have to deal with in order to do business. Look at this latest financial regulation. Businesses now have to provide detailed reports of suppliers they bought over $300 worth of stuff from. $300!!! That means more paperwork, potentially another paper pusher to deal with it who does nothing to add to their bottom line or productivity, and probably higher taxes.

There is absolutely no life in the economy unless you work in the government or a sector of the economy that exists because of the government like the solar energy market. Probably 90% of solar out there is only being built because the rest of us are paying for it. Sure some people put it on their homes because they want to. But you have to wonder if they'd bother if not for the massive tax credit and other subsidies on it. 50-60% of the cost is subsidized by the rest of us. If not for that the break even point would be in 25-30 years instead of 5-10.


RE: Well duh
By Quadrillity on 8/13/2010 6:10:24 PM , Rating: 2
Please do us all a favor an read the actual discussion before jumping in at last minute. My stance on these things have already been posted.


RE: Well duh
By FITCamaro on 8/13/2010 1:43:15 PM , Rating: 2
From a completely outside view without looking at any of the details, it is true.

But as they say, the devil is in the details. I will not pretend to be a bankruptcy expert. But GM was hardly the first large company to potentially go bankrupt from overburdening debt. Reclaimer made a far better argument than me as to what could have happened in absence of the government taking over.


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