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'Bankruptcy' fear hits GM shares

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'Bankruptcy' fear hits GM shares

General Motors shares have fallen to their lowest level in more than 53 years amid concerns about the carmaker's future.

Investment bank Merrill Lynch warned that GM needs to raise funds and that bankruptcy was "not impossible".

GM has suffered from falling sales as US consumers have cut back on spending and record fuel costs have seen them switch to smaller, more efficient cars.

GM's shares hit a low of $9.96, before closing down 15% at $9.98 on Wednesday.

The share price touched its lowest level since September 1954, when the stock hit $9.92 during trading.

GM shares have fallen 60% so far this year and Merril Lynch predicted that the shares could fall even further.

"We believe there is potential downside in the stock below $7 and that bankruptcy is not impossible if the market continues to deteriorate and significant incremental capital is not raised," said analyst John Murphy.

Merrill's had previously predicted a value of $28 for GM's shares.

Full story, source: BBC

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BiffSplitkins

Keep on building those big gas hogs GM. Another American buisiness failing miserably.

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goalienan

It's only going to get worse before it gets better...Right now Ford is closing plants left and right, leaving employees struggling...They say it's only temporary, which is another joke.

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sear

As an automobile enthusiast, I've liked such GM products as the Corvette, the GTO, the Firebird, the Camaro; and if I recall correctly, GM even offered a mid-engine something or other (Pontiac perhaps) in the early to mid-1980's.

But GM's quality & durability have never impressed me.

And it's clear they're not very good at assessing their market.

Why they don't have automobiles that can get 40+ MPG I don't know. What about the Geo Metro?

Smarten up GM!

It's the 3rd Millennium!

Act like it!

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Lt_Ripley

well when you lay off tons of people and send work to mexico who can afford to buy the cars ?

this was coming well before gas prices.

when quick profit becomes bottom line at the expense of workers what moron doesn't see that in the long run it's a catch 22 ? It didn't stop GM from closing plants here in Michigan to open them up in China. But the bulk of chinese can't afford the vehicles. and now neither can alot of Americans.

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BiffSplitkins
It's only going to get worse before it gets better...Right now Ford is closing plants left and right, leaving employees struggling...They say it's only temporary, which is another joke.

It's already been hitting us here in Central NY. New Process Gear to drop 250 Employees.

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in related news:

GM May Sell Mini-Cars to Fuel-Conscious U.S. Buyers

July 3 (Bloomberg) -- General Motors Corp., which popularized the 7,800-pound Hummer, may begin selling a mini-car more than a foot shorter than anything else it markets in the U.S. to win back buyers deterred by record fuel prices.

GM may bring the production version of the Chevrolet Beat to the U.S., people familiar with the plan said. The car, which would normally be reserved for markets such as Asia and Latin America, gets as much as 40 miles a gallon, a fuel efficiency topped in the U.S. only by hybrids.

The possible American introduction of the Beat would be one step in a fleet downsizing and shift away from fossil fuel-based vehicles that the people said is already under way at Detroit- based GM. Resigned to $4-a-gallon gasoline and stricter pollution rules, the largest U.S. automaker has recognized that its response must go beyond the mothballing of large truck plants, the people said.

``This is a very big change for GM,'' said John Wolkonowicz, an analyst at Global Insight Inc. in Lexington, Massachusetts. ``They have no choice. There's never been as rapid a shift in consumer demand in the history of the auto industry.''

GM, turning 100 this year, has few options to re-inventing itself. The company reported its largest annual loss in 2007, $38.7 billion, after a tax accounting change, and hasn't had a profitable year since 2004. The carmaker's U.S. market share hovers at the lowest level since 1925, and last year GM was 3,000 cars away from being dethroned by Toyota Motor Corp. as the world's largest automaker.

Smaller Than Mattel

The company's current market value is smaller than that of Mattel Inc., maker of Matchbox cars, and a 10th of what it was in 2000. A Merrill Lynch analyst said yesterday that a GM ``bankruptcy is not impossible if the market continues to deteriorate.''

------------------------------

Now, is selling a car, that may satisfy consumer's demand at this time, in four years going to save GM, or is it just media spin?

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Sag!ttarius

As long as the spare parts keep on coming somehow, couldn't care less. Got my first GM truck 2 years ago, last one I'll ever get, bankrupt or not. The Unions literally killed this company and will do the same with Ford. Not sure how Chrysler is doing since the takeover.

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Lt_Ripley
As long as the spare parts keep on coming somehow, couldn't care less. Got my first GM truck 2 years ago, last one I'll ever get, bankrupt or not. The Unions literally killed this company and will do the same with Ford. Not sure how Chrysler is doing since the takeover.

I'm so sick of hearing the right wing nut case rhetoric that Unions had anything to do with the plant closings. Auto companies had the unions for decades and had great success. The unions were a major tool that help provide a great lifestyle for families. If Ford had provided Walmart wages, they never would ever had decent product or any kind of success.

Edited by Lt_Ripley

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Atheist God
As long as the spare parts keep on coming somehow, couldn't care less. Got my first GM truck 2 years ago, last one I'll ever get, bankrupt or not. The Unions literally killed this company and will do the same with Ford. Not sure how Chrysler is doing since the takeover.

What killed GM was not the unions... Those who oppose unions oppose workers rights and decent wages.

What really is killing GM are the vehicles they make and bad business decisions along with poor market conditions which is hitting all auto makers.

Edited by Atheist God

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What really is killing GM are the vehicles they make and bad business decisions along with poor market conditions which is hitting all auto makers.

Not really...sales for the Smart are up.

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What really is killing GM are the vehicles they make and bad business decisions along with poor market conditions which is hitting all auto makers.

Not really...sales for the Smart are up.

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Atheist God
Not really...sales for the Smart are up.

Even still there sales aren't as strong as they were a couple of years ago... Some companies did turn a profit like Honda and Smart etc but the margins are still smaller then in previous years due to the fact that people are becoming increasingly unable to purchase vehicles due to the rising cost of everything else.

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Sag!ttarius
I'm so sick of hearing the right wing nut case rhetoric that Unions had anything to do with the plant closings. Auto companies had the unions for decades and had great success. The unions were a major tool that help provide a great lifestyle for families. If Ford had provided Walmart wages, they never would ever had decent product or any kind of success.

Yeah sure. 6G$ on any new GM vehicle right of the top before it's even built goes to retired GM workers, people not working on the car! Over unionized company. I got nothing against the "Business in good shape, workers in good shape" philosophy. However, when business is bad, workers should pitch in equally. Responsible unions, I got no problems with. Don't wonder why business is leaving the US for China or Mexico...

PS: I'm no right wing guy. Just plain money smart type of person.... I've worked for a lot of strong union businesses. Every time there's a buck of profit, they'd risk loosing their jobs instead of letting the company invest in new infrastructures to be more competitive

Edited by Sag!ttarius

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Stardrive
It's only going to get worse before it gets better...Right now Ford is closing plants left and right, leaving employees struggling...They say it's only temporary, which is another joke.

I saw the stats on the news today. Toyota, VW, Honda, Nissan, Ford, (in that order) are selling the most cars. I wonder why Ford is closing plants when they are the only US manufacturer still turning a profit? If US automakers want to stay in business they're going to have to cut their ties with big oil.

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Dowdy

Well, there goes the argument that a weak US dollar is good for US companies due to cheaper exports

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Clocker
I saw the stats on the news today. Toyota, VW, Honda, Nissan, Ford, (in that order) are selling the most cars. I wonder why Ford is closing plants when they are the only US manufacturer still turning a profit? If US automakers want to stay in business they're going to have to cut their ties with big oil.

I thought Ford suffered a loss of like $2 billion last year? But they have been getting better though, and I suppose the changes they're making require their costs too so who knows, they might end up profitable in a few years.

Other than that, I'm not surprised that GM is still doing as bad as it is. Seriously they've been continuing their own ways forever even though they've been doing relatively badly forever too. Bad management is the reason for their downfall.

Edited by Clocker

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Well, there goes the argument that a weak US dollar is good for US companies due to cheaper exports

Its simple ...people don't buy trash..no matter how cheap.

Last month I was in the States for a few weeks and had a Dodge from the rental company...well guess what, that car is so screwed up that, when you are the first at a traffic light you can't see it...you have to wait until somebody beeps his horn.

How do they suppose there is a market for that?

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I thought Ford made a loss of like $2 billion last year? But they have been getting better though, and I suppose the changes they're making require their costs too so who knows, they might end up profitable in a few years.

Other than that, I'm not surprised that GM is still doing as bad as it is. Seriously they've been continuing their own ways forever even though they've been doing relatively badly forever too. Bad management is what I say is the reason for their downfall.

... and lack of innovation. If you want to see new antiques all you have to do is go see a Vauxhall or an Opel...

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