Print 58 comment(s) - last by PaterPelligrin.. on Aug 24 at 1:22 AM

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.

Comments     Threshold

This article is over a month old, voting and posting comments is disabled

By MGSsancho on 8/13/2010 11:41:57 AM , Rating: -1
That is how GM made any money this year. Fire an executive and suddenly you have enough money to make a profit. Hmm maybe they should continue this trend :). Now if only things really were this simple.

RE: Profit
By inperfectdarkness on 8/13/2010 12:08:42 PM , Rating: 1
no, it's true. but ONLY if you can do it without a golden parachute.

bob nardelli. 5.5 years; 500 MILLION dollars. you could have taken your average head-cashier and put them in the CEO office--and they could have performed an equally mediocre job, if not done it superbly better. and you could probably have paid said cashier 1/200th (maybe a tad less) of the salary you paid nardelli--thereby generating increased profit margins even while yielding identical performance.

someone tried to use the "buy american" argument on me the other day when explaining why he wanted a GM truck. i laughed. the only difference between "american brand" and "japanese brand" vehicles in today's market is where the HQ and ceo are located. and japanese CEO's make 1/10th or less of what average US ceo's make.

businesses should be run like democracies; not plutocracies.

RE: Profit
By Masospaghetti on 8/13/2010 12:42:46 PM , Rating: 4
someone tried to use the "buy american" argument on me the other day when explaining why he wanted a GM truck. i laughed. the only difference between "american brand" and "japanese brand" vehicles in today's market is where the HQ and ceo are located. and japanese CEO's make 1/10th or less of what average US ceo's make.

Where do you think the designers are? How about the tens of thousands of engineers? These are the HIGH PAYING jobs that we should be trying to keep in the USA. But no matter. Keep buying your Japan-designed and Japan-engineered vehicle and let low-paying American workers put it together - surely this is just as good for our economy.

RE: Profit
By chick0n on 8/13/10, Rating: -1
RE: Profit
By inperfectdarkness on 8/16/2010 2:18:22 PM , Rating: 2
supply and demand. consumers want the best product at the lowest price. if we're willing to overpay our CEO's and have product quality suffer for it--then we deserve what comes our way.

while i do mourn the loss of highly-skilled jobs to foreign markets; i feel that only national defense falls into the realm of jobs which the government is required to keep tabs on.

propping up GM only prolongs the downward slide of a once-great nation. greedy pronoid behaviors will eventually topple all large corporate american enterprises. our economy cannot survive under the weight of plutocratic greed; and our country cannot maintain dominance without economic and corporate power.

it's ok though. when push comes to shove, the more factories that exist here--the better prepared we will be to handle another massive conflict. you can't mimic WWII style production if all you possess is corporate HQ & some design/engineering powerhouses.

"Spreading the rumors, it's very easy because the people who write about Apple want that story, and you can claim its credible because you spoke to someone at Apple." -- Investment guru Jim Cramer

Copyright 2016 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki