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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 Reclaimer77 on 8/13/2010 11:54:47 AM , Rating: 2
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.

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?

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
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.

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