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Thread: Kerkorian dumps GM shares, stock tanks

  1. #1
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    Kerkorian dumps GM shares, stock tanks

    http://money.cnn.com/2005/12/20/news...reut/index.htm

    Aaah yes, the sun just keeps shining on GM.

    A certain number pops into my head everytime I think of GM, it's the number 11.

    Time for GM to cut loose those ridiculous union wages and return to normalcy and profitability.
    Eh, what's this? A Republican from Texas that actually makes sense and can speak English?

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    He may be planning to buy them back when the stock drops further. Meanwhile he takes a loss on this year's taxes. But I think it is time for the fat lady to sing for GM. As far as I can tell, they are terminal. Their P/E is in negative territory. If the Delphi situation cannot be resolved they could literally be out of business within three months or so. They would burn through $4 billion a month. Their total capitalization is under $12 billion. They bought off the UAW during the fat years; now the lean years have come and they are up a creek without a paddle. I can't dial up a lot of sympathy for them. It would be best if they just bit the bullet and filed for Chapter 11. Shutter Pontiac, Buck, Saab and Saturn and retain the Chevrolet and Cadillac brands and consider merging with Ford. Or just liquidate altogether. It may come to that anyway.
    "We sleep soundly in our beds because rough men stand ready in the night to visit violence on those who would do us harm." - Winston Churchill

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    Quote Originally Posted by gamehuis
    http://money.cnn.com/2005/12/20/news...reut/index.htm

    Aaah yes, the sun just keeps shining on GM.

    A certain number pops into my head everytime I think of GM, it's the number 11.

    Time for GM to cut loose those ridiculous union wages and return to normalcy and profitability.
    Similar to the number I keep envisioning for ford....and that number is.....5

    Don't know how many caught it, but Ford just sold off Hertz. Hertz made a good return, it was not one of Fords loosing propositions. It is sad to see a company like Ford have to sell off profitable divisions just to raise cash for operations.
    If ye love wealth greater than liberty, the tranquility of servitude greater than the animating contest for freedom, go home from us in peace. We seek not your counsel, nor your arms. Crouch down and lick the hand that feeds you; May your chains set lightly upon you, and may posterity forget that ye were our countrymen. —Samuel Adams

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    Quote Originally Posted by daewoo
    Don't know how many caught it, but Ford just sold off Hertz.
    I knew that they were planning to sell Hertz, but I didn't know that they'd already sold it.

    Quote Originally Posted by daewoo
    Hertz made a good return, it was not one of Fords loosing propositions. It is sad to see a company like Ford have to sell off profitable divisions just to raise cash for operations.
    Yeah these are strange days we live in, a company shouldn't have to sell its profitable divisions to sustain its unprofitable ones. In fact, it should be the other way around...
    Eh, what's this? A Republican from Texas that actually makes sense and can speak English?

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    Quote Originally Posted by gamehuis
    Yeah these are strange days we live in, a company shouldn't have to sell its profitable divisions to sustain its unprofitable ones. In fact, it should be the other way around...
    It is strange and 180° from what was formerly accepted practice. But isn't that like GM proudly stating it had come to a 'satisfactory' agreement with its labor unions and in the next breath admitting it wasn't good enough to resolve the problem?

    Neither Ford or GM have released projections for downsized production in the form of market share, operating margins or earnings. We know they have them, business plan models are now so sophisticated management can easily see the future on a daily basis.

    I think both Ford and GM are trying to buy time to build in China in anticipation of that market. If you look at Delphi only the US pieces are in trouble, only the US pieces were chaptered and they're prepared to continue US production only at wage/benefit levels allowing them to be competitive on a global scale. Until Ford and GM reach that state, IMO impossible with entrenched, existing management, they're going to continue throwing good money at bad business.
    These are my principles. If you don't like them I have others. ~Groucho Marx~

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    I just checked the profiles of both Ford and GM today. Ford has a higher capitilization than does GM. The P/E is completely different. GM's is actually in negative territory. The stock is at a new low for the year. How much longer can this go on?

    I've got a 2005 F-150 in my garage and the other day I bought a new Ford Escape Hybrid to replace my 2003 Escape. I haven't bought a new GM product in years. What does GM bring to the table? Probably the only product line that has been truly innovative in years has been the Cadillac division.

    In my opinion, the best thing that can happen for both GM and Ford is for GM to file Chapter 11 before they have to liquidate everything. GM is almost certainly terminal. I don't see how they can possibly recover. They say their new large, "redesigned" SUV lines will save them. Yeah, sure! That'll work.
    "We sleep soundly in our beds because rough men stand ready in the night to visit violence on those who would do us harm." - Winston Churchill

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    Quote Originally Posted by Missouri Mule
    In my opinion, the best thing that can happen for both GM and Ford is for GM to file Chapter 11 before they have to liquidate everything. GM is almost certainly terminal. I don't see how they can possibly recover. They say their new large, "redesigned" SUV lines will save them. Yeah, sure! That'll work.
    GM has nearly $20 billion in cash reserves and irrevocable lines of credit over $60 billion. GM is not a good candidate for bankruptcy.

    Ford , on the other hand, has nowhere near those cash reserves, and their last significant line of credit was pulled in 2002. They just sold Hertz for a paltry $5.6 billion.

    What it boils down to is that they are already liquidating.

    You are thinking with your heart here, MM, not your head. The victor in this will be the company that out survives the other, and frankly Ford does not have a chance. They blew all their cash buying up (and destroying) other companies (jaguar, land rover, etc...) and are now stuck with a bunch of unmarketable paper assets.

    What both companies are after is the "buy American" crowd....the folks who are willing to pay more for a sub standard quality product because it makes them feel patriotic. It does not mater which company survives or their offerings. The surviver gets the other companies market share of the patriotic money slingers.

    GM can run for 10 years without turning a profit. I know which ship I would rather be at the helm of.
    If ye love wealth greater than liberty, the tranquility of servitude greater than the animating contest for freedom, go home from us in peace. We seek not your counsel, nor your arms. Crouch down and lick the hand that feeds you; May your chains set lightly upon you, and may posterity forget that ye were our countrymen. —Samuel Adams

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    Quote Originally Posted by daewoo
    GM has nearly $20 billion in cash reserves and irrevocable lines of credit over $60 billion. GM is not a good candidate for bankruptcy.

    Ford , on the other hand, has nowhere near those cash reserves, and their last significant line of credit was pulled in 2002. They just sold Hertz for a paltry $5.6 billion.

    What it boils down to is that they are already liquidating.

    You are thinking with your heart here, MM, not your head. The victor in this will be the company that out survives the other, and frankly Ford does not have a chance. They blew all their cash buying up (and destroying) other companies (jaguar, land rover, etc...) and are now stuck with a bunch of unmarketable paper assets.

    What both companies are after is the "buy American" crowd....the folks who are willing to pay more for a sub standard quality product because it makes them feel patriotic. It does not mater which company survives or their offerings. The surviver gets the other companies market share of the patriotic money slingers.

    GM can run for 10 years without turning a profit. I know which ship I would rather be at the helm of.
    We've had this argument before and I haven't the time to reargue it right now as I need to leave for lunch. Do me a flavor and go to Smartmoney and just do a search and look at the numbers. They are plain for anyone to see. Ford is being dragged down by GM's woes. GM is terminal. You can bank on it.

    I'm not getting this "destroying" business. Jaguar has been a money pit but Volvo has done quite well.

    As to Hertz, Ford also passed along the debt with the sale.

    Look at Smartmoney. Please.
    "We sleep soundly in our beds because rough men stand ready in the night to visit violence on those who would do us harm." - Winston Churchill

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    Good opinion piece in today's WSJ regarding GM's problems. Suggested reading. Says that GM should publically declare the potential of declaring bankruptcy to break the logjam with the union. These "concessions" to this point don't amount to a hill of beans.
    "We sleep soundly in our beds because rough men stand ready in the night to visit violence on those who would do us harm." - Winston Churchill

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    Quote Originally Posted by Missouri Mule
    Good opinion piece in today's WSJ regarding GM's problems. Suggested reading. Says that GM should publically declare the potential of declaring bankruptcy to break the logjam with the union. These "concessions" to this point don't amount to a hill of beans.
    Mule, you can discount any article that suggests the GM declare bankruptcy out of hand. Bankruptcy is NOT an option for GM. Bankruptcy is for companies that are having trouble paying their bills. Companies that have enough cash on hand to pay 4-5 yrs operating costs, even if those 4-5 years are unprofitable, do not qualify for bankruptcy protection. It is not an option. If they try, the court will deny them.
    If ye love wealth greater than liberty, the tranquility of servitude greater than the animating contest for freedom, go home from us in peace. We seek not your counsel, nor your arms. Crouch down and lick the hand that feeds you; May your chains set lightly upon you, and may posterity forget that ye were our countrymen. —Samuel Adams

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    Quote Originally Posted by daewoo
    Mule, you can discount any article that suggests the GM declare bankruptcy out of hand. Bankruptcy is NOT an option for GM. Bankruptcy is for companies that are having trouble paying their bills. Companies that have enough cash on hand to pay 4-5 yrs operating costs, even if those 4-5 years are unprofitable, do not qualify for bankruptcy protection. It is not an option. If they try, the court will deny them.
    You should read the article. BTW, they could be broke inside of four months if the Delphi deal blows up in their face.

    Their stock closed at $18.64. Their market cap is now a mere $10.773 billion and their P/E is a negative $3.29. The market average is $19.30. Their stock price touched a 23 year low today. Watch it reach another tomorrow.

    Ford's market cap is $14.898 billion. Their P/E is $8.27. Bad but nothing as bad as GM.

    Now Toyota's market cap is $167.384 billion. Their P/E is $15.79.

    GM is terminal. Ford is shaky. Toyota is doing great.
    Last edited by Missouri Mule; 12-22-2005 at 11:25 PM.
    "We sleep soundly in our beds because rough men stand ready in the night to visit violence on those who would do us harm." - Winston Churchill

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    Quote Originally Posted by Missouri Mule
    You should read the article. BTW, they could be broke inside of four months if the Delphi deal blows up in their face.
    No, they could not. I have heard this argument as well, and is basically seems to base upon GM buying higher cost parts from otehr sources if Delphi goes down. In the real world, there is no chance that Delphi will go down at this point. The judge has already signaled that he has no problem with canceling Delphis union contract all together if the union does not come into line.

    If Delphi did go under, there is NO WAY Gm would forge ahead buying parts at market cost. They would temporarily close down production before they did that. Even with productions ceased, they still have enough CASH, without touching their credit lines, to run for 4-5 years.

    Their stock closed at $18.64. Their market cap is now a mere $10.773 billion and their P/E is a negative $3.29. The market average is $19.30. Their stock price touched a 23 year low today. Watch it reach another tomorrow.
    Market cap of $10.773 billion, and over 20 buillion in cash. This is not a problem.

    Ford's market cap is $14.898 billion. Their P/E is $8.27. Bad but nothing as bad as GM.
    Market cap of 14.898 billion and only 8 billion in convertible assets. That is WORSE than the GM position.

    P/E essentially is the companies profit divided by the number of shares. Certainly a good indicator of past performace, but not very good when it comes to predicting the future.

    AS things stnd now, both companies are terminal. Toyota is moving up in market share, and neither company is really competitive. What it is going to boil down to is who can survive the longest. Regardless of your personal feelings regarding the qualty of the vehicles made by each, What it comes down to is which compnay can outlast the other.

    You need to get your emotions under control if you are going to play with money. It was not that long ago that you were bragging about how much Ford stock you owned, and how you intended to buy more, the same week their bonds were downgraded to junk.

    If it makes you feel any better, I think that Ford makes a better product as well. In a just world, Ford would deserve to survive. We do not live in a just world. They do not have the financial resources to ride out any kind of serious storm, and the clouds are gathering. GM makes an inferior product to Ford, but has the cash on hand to ride out a hurricane.
    If ye love wealth greater than liberty, the tranquility of servitude greater than the animating contest for freedom, go home from us in peace. We seek not your counsel, nor your arms. Crouch down and lick the hand that feeds you; May your chains set lightly upon you, and may posterity forget that ye were our countrymen. —Samuel Adams

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    Quote Originally Posted by daewoo
    No, they could not. I have heard this argument as well, and is basically seems to base upon GM buying higher cost parts from otehr sources if Delphi goes down. In the real world, there is no chance that Delphi will go down at this point. The judge has already signaled that he has no problem with canceling Delphis union contract all together if the union does not come into line.

    If Delphi did go under, there is NO WAY Gm would forge ahead buying parts at market cost. They would temporarily close down production before they did that. Even with productions ceased, they still have enough CASH, without touching their credit lines, to run for 4-5 years.



    Market cap of $10.773 billion, and over 20 buillion in cash. This is not a problem.



    Market cap of 14.898 billion and only 8 billion in convertible assets. That is WORSE than the GM position.

    P/E essentially is the companies profit divided by the number of shares. Certainly a good indicator of past performace, but not very good when it comes to predicting the future.

    AS things stnd now, both companies are terminal. Toyota is moving up in market share, and neither company is really competitive. What it is going to boil down to is who can survive the longest. Regardless of your personal feelings regarding the qualty of the vehicles made by each, What it comes down to is which compnay can outlast the other.

    You need to get your emotions under control if you are going to play with money. It was not that long ago that you were bragging about how much Ford stock you owned, and how you intended to buy more, the same week their bonds were downgraded to junk.

    If it makes you feel any better, I think that Ford makes a better product as well. In a just world, Ford would deserve to survive. We do not live in a just world. They do not have the financial resources to ride out any kind of serious storm, and the clouds are gathering. GM makes an inferior product to Ford, but has the cash on hand to ride out a hurricane.

    The problem is that they can't shut down due to their "job banks" provision in the union contract.
    Even if they shut down every plant they have they would still have to pay most of the regular money. And the legacy costs are out of this world. Waggoner is an idiot. I can't see how he keeps his job much longer.

    This is not an emotional issue with me. I have Ford products but I don't believe that brand is going into the tank and it will somehow be an orphan brand.

    I don't have the numbers in front of me, but if my memory is correct, GM's "legacy costs" are about $300 billion. Ford's is about $100 billion. GM has far more retired workers than does Ford and now they must pay those pension and medical care benefits. It is unsustainable.

    Recently I read that GM could "burn through" $4 billion a month on the Delphi deal alone. My arithmetic says that is about 4-5 months and their cap is $0.

    What does GM have to bring to the market? A larger and "improved" SUV? Please.

    If I were running the company I would dump Buick, Pontiac, GMC, Saturn and Saab immediately. Then I would go to the UAW with Chapter 11 papers in hand and give them an ultimatum. Essentially it would be a message that the gravy train is over. Either capitulate and cut the labor and legacy costs by a minimum of 50% or the papers will be filed that afternoon. It is either do it or get off the pot. And the clock is ticking. It is about 11:59 and GM will turn into a pumpkin. The fat lady is about to sing.

    Ford stayed with the SUV market too long; that is true. But their new auto models are really quite good. They are here and available for sale. The F-150 will still sell about 900,000 units this year and for my money is still the superior product. The Volvo line is doing just fine. They need to dump the Jaguar as it is not profitable. Should never have bought it. Probably the same with Land Rover. I most emphatically do not agree with you that the Ford line of products is uncompetitive. I wouldn't have bought mine if I thought otherwise. Name me a competitor to the Ford Escape Hybrid that I own. There isn't one. Name a better truck than the F-150. There isn't one. The new Ford Fusion was barely edged out in recent ratings by the Honda Accord and just barely but handily beating the Toyota Camry which came in dead last. (I believe this was in Car and Driver.) The Ford Explorer is still the overall best in its class. The new 500 is starting to catch on well. The Ford Mustang has been doing very well. What am I missing here? Compare that to the nothingburgers that GM is offering. The Solstice is a fine looking small car but that can't sustain the company. The Saab is just a money pit and should be killed off. The idiotic deals with Fiat and Suburu cost about $3 billion. This is a company that can't shoot straight.

    If GM does file, the UAW will capitulate on Ford as well or take the consequences. The old ways of doing business just won't do any more. The retirees will probably scream bloody murder and the news hours will show the predictable bawling and squawling. But right now the labor costs average out to about $137,000 per employee and retiree. How ridiculous is that for essentially unskilled workers?

    As difficult as this may be to believe, the U.S. auto market is going great guns. In point of fact we have about 2,000,000 more auto workers today than we used have working right here in the U.S. They just happen to be working for Japanese and German nameplate manufacturers.

    I'm sorry to say it but if a company ever deserved to go bankrupt, GM is certainly well deserving. This is a problem of their own making. They bribed the unions in the fat years and now they are in the lean years and rapidly running out of time.

    BTW, I don't own very much Ford stock. I was doing some bottom fishing and my investment is very small. Even if it goes to zero I won't be losing much and I don't expect that to happen.
    "We sleep soundly in our beds because rough men stand ready in the night to visit violence on those who would do us harm." - Winston Churchill

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    Quote Originally Posted by Missouri Mule

    The problem is that they can't shut down due to their "job banks" provision in the union contract.
    Even if they shut down every plant they have they would still have to pay most of the regular money. And the legacy costs are out of this world. Waggoner is an idiot. I can't see how he keeps his job much longer.
    It seems likely that the UAW will come tot he table on this one, which would be his only saving grace. If not, there is talk of dumping their pension plan alltogether and lettign the taxpayer pick up the bill.

    I don't have the numbers in front of me, but if my memory is correct, GM's "legacy costs" are about $300 billion. Ford's is about $100 billion. GM has far more retired workers than does Ford and now they must pay those pension and medical care benefits. It is unsustainable.
    GMs legacy costs are not $300 billion. Their legacy health costs are $60 billion and their pension legacy costs are $87 billion. That is not per year, that is total. In the real world, that only equates to about 8.5 billion per year, and their pension plan and health care plan are bothe partially funded (+60%). Real world legacy costs requiring out of pocket expenses are only around $4 billion per year. If all they do is break even, they will have paid those legacy costs and preserved tehir cash.

    That is the other skeleton in Fords closet. They raped their pension fund to buy Jaguar and Land Rover. It is funded at less than 30%, which means they are actually having to pay more legacy costs in dollars than GM, despite the fact that their overall legacy costs are lower.

    Recently I read that GM could "burn through" $4 billion a month on the Delphi deal alone. My arithmetic says that is about 4-5 months and their cap is $0.
    A. whoever wrote the firrst is an idiot. A COMPLETE bailout of Delphi would only cost 5.2 billion.

    B. cap has NOTHING to do with this discussion. Cap is the total value of outstanding stock shares. It has absolutly nothing to do with how much money a company has.

    What does GM have to bring to the market? A larger and "improved" SUV? Please.
    $80 billion


    Ford stayed with the SUV market too long; that is true. But their new auto models are really quite good. They are here and available for sale. The F-150 will still sell about 900,000 units this year and for my money is still the superior product. The Volvo line is doing just fine. They need to dump the Jaguar as it is not profitable. Should never have bought it. Probably the same with Land Rover. I most emphatically do not agree with you that the Ford line of products is uncompetitive. I wouldn't have bought mine if I thought otherwise. Name me a competitor to the Ford Escape Hybrid that I own. There isn't one. Name a better truck than the F-150. There isn't one. The new Ford Fusion was barely edged out in recent ratings by the Honda Accord and just barely but handily beating the Toyota Camry which came in dead last. (I believe this was in Car and Driver.) The Ford Explorer is still the overall best in its class. The new 500 is starting to catch on well. The Ford Mustang has been doing very well. What am I missing here? Compare that to the nothingburgers that GM is offering. The Solstice is a fine looking small car but that can't sustain the company. The Saab is just a money pit and should be killed off. The idiotic deals with Fiat and Suburu cost about $3 billion. This is a company that can't shoot straight.
    You can argue all you like about their product line and point to as many advertiser driven reviews as you like. Their market share continues to shrink every year and is projected to continue to do so for the forseeable future.

    If GM does file, the UAW will capitulate on Ford as well or take the consequences. The old ways of doing business just won't do any more. The retirees will probably scream bloody murder and the news hours will show the predictable bawling and squawling. But right now the labor costs average out to about $137,000 per employee and retiree. How ridiculous is that for essentially unskilled workers?
    First, we already established that it is virtually impossible for GM to declare bankruptcy. Second, they are not going to have to. The UAW is coming to the table. They have no choice. Either they come to the table or NOBODY has a job.

    Consequences? The UAW has Frod by the nuts. There can be no consequences, and they have alreayd stated that while Ford is showing billion dollar profits, they will not renegotiate current benifit levels. It is a simple matter of volume. GM employs and supports a lot more UAW workers than Ford does. IF only one is going to survive, they want it to be GM

    As difficult as this may be to believe, the U.S. auto market is going great guns. In point of fact we have about 2,000,000 more auto workers today than we used have working right here in the U.S. They just happen to be working for Japanese and German nameplate manufacturers.
    With all the profit going back to Japan and Germany. Great. We are Japans mexico. Theres somethign to strive for.

    I'm sorry to say it but if a company ever deserved to go bankrupt, GM is certainly well deserving. This is a problem of their own making. They bribed the unions in the fat years and now they are in the lean years and rapidly running out of time.
    Then again, they also put away $20 billion plus against the lean years. Ford, on the other hand, also bribed the unions during the fat years, then blew all their cash.

    I personally dislike both companies. Their products are, IMO, garbage and they both suffer from terrible management. Either one could be a textbook example of how NOT to run a company.

    Facts is Facts

    Fors HAS TO MAKE $2 billion per year or they will be out of business in 3 years. Lst year was the first that they failed to make their $2 billion. Their profit projections for next year are even worse.

    GM can make NOTHING for the next 5 years and still have CASH without even touching thier credit lines.
    If ye love wealth greater than liberty, the tranquility of servitude greater than the animating contest for freedom, go home from us in peace. We seek not your counsel, nor your arms. Crouch down and lick the hand that feeds you; May your chains set lightly upon you, and may posterity forget that ye were our countrymen. —Samuel Adams

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    I don't know what to say.

    As I predicted, GM's stock is down again to a new low of $18.40 but it has come up just a bit in the half hour or so. Market cap now down to $10.5 billion. In any event I believe your figures for legacy costs are understated I am relatively certain that I have read it was closer to $300 billion (perhaps it was for all unfunded liabilities.) But putting that aside for now, let me quote from the WSJ of this past Wednesday, just two days ago.

    "At yesterday's stock price, GM's market capitalization is less than $12 billion, and less than the $19 billion GM's automotice operations had on hand as of September 30....Mr. Wagoner said in a recent statement, however, that GM has no plans to seek Chapter 11 protection....

    Sounds to me like the vote of confidence that the baseball manager is always given the day before he is fired.


    (on the previous page is a full page ad for Ford's new Fusion with all of the statements made by the automotive magazines.)

    And then there is this:

    Firm Seeks Lead Plaintiff For Suit Vs GM Over Accounting
    December 22, 2005

    DETROIT -(Dow Jones)- A national class-action law firm is on the hunt for a lead plaintiff in a suit against General Motors Corp. (GM) over alleged misrepresentation of the company's financial performance in recent years.

    Leach Coughlin Stoia Geller Rudman & Robbins LLP issued a press release Thursday saying GM issued "numerous positive statements and filed quarterly and annual reports with the Securities and Exchange Commission which described the company's financial performance." The firm, known for taking on corporations that are under SEC scrutiny or have filed for bankruptcy, said GM's statements "were materially false and misleading."

    In 2005, Leach Coughlin has built a reputation going after other embattled companies
    on behalf of disgruntled shareholders. The list includes Guidant Corp. (GDT), Refco Inc. (RFXCQ), WorldCom Inc. and Enron Corp.

    Leach Coughlin points to a GM's revelation in November that it overstated income for 2001 by as much as $300 million to $400 million, which is equivalent to about 50% of the profit it reported at the time. The company said it "erroneously" booked credits from suppliers.

    GM's admission came after the market close Nov. 9, which had been a rough day for the auto maker's already-sluggish stock. Shares of GM closed that day down $1.23, or nearly 5%, at $24.63, thanks in part to a Fitch rating cut of GM's debt further into junk status.

    GM's accounting trouble comes amid an ongoing probe by the SEC into the auto maker's insurance and pension practices.

    The law firm has set its class period for between April 18, 2001 and Nov. 19, 2005. Persons wishing to serve as lead plaintiff must move the court no longer than Jan. 20, the firm said in its release.

    The suit against GM punctuates yet another difficult day for the company's stock performance. Shares closed at a fresh 23-year low of $18.64 on Thursday, 2.15% lower than Wednesday's close. The value of the company's stock has declined 55% from its 52-week high...

    (Snip)

    http://www.smartmoney.com/news/ON/in...22-001155-1908
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