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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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RE: Well duh
By mrdeez on 8/13/2010 10:22:45 AM , Rating: 0
It was a loan not a gift. They HAVE to pay it back and they are...


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.


"And boy have we patented it!" -- Steve Jobs, Macworld 2007














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