Analysts left cold by GM's cutbacks
Posted: Thu Feb 09, 2006 4:23 am
Analysts left cold by GM's cutbacks
Ailing automaker's stock falls a 2nd day after analyst issues rare 'sell' advisory
Associated Press
NEW YORK -- General Motors Corp. received another dose of bad news Wednesday when Deutsche Bank advised shareholders to sell the stock because of continued uncertainty over the company's financial future.
Rod Lache, an analyst with Deutsche Bank, issued a rare "sell" rating and lowered his price target on GM shares to $17 from $22. The stock -- which fell 2.3 percent on Tuesday -- fell another 82 cents, or about 3.5 percent, to $21.99 on the New York Stock Exchange.
The world's largest automaker on Tuesday outlined a plan to cut white-collar pension and health-care expenses, slash its dividend and trim executive salaries as part of its latest bid to avert bankruptcy. However, the cuts did not get a strong endorsement from Wall Street analysts.
"We continue to be disappointed by the limited cash savings targeted by current restructuring efforts," Lache said in a report. "Our concerns go beyond the ongoing market share erosion, uncertainty over the GMAC sale, and uncertainty over (parts supplier) Delphi."
GM said the cut in its dividend alone will reduce its yearly cash payout by about $565 million. Cash savings from the health-care changes will grow to about $200 million within five years.
Lache said the latest round of cuts is seen as a way for GM to come back and ask union workers for more concessions. He said there also appears to "be an ever increasing probability of confrontation with the United Auto Workers."
The biggest threat to GM's stability still remains a union strike at Delphi, Bear Stearns analyst Peter Nesvold said in a report.
Negotiations involving the UAW, General Motors and Delphi appear to have made little progress on the restructuring of the parts maker. Delphi sought bankruptcy protection in the fall.
Ailing automaker's stock falls a 2nd day after analyst issues rare 'sell' advisory
Associated Press
NEW YORK -- General Motors Corp. received another dose of bad news Wednesday when Deutsche Bank advised shareholders to sell the stock because of continued uncertainty over the company's financial future.
Rod Lache, an analyst with Deutsche Bank, issued a rare "sell" rating and lowered his price target on GM shares to $17 from $22. The stock -- which fell 2.3 percent on Tuesday -- fell another 82 cents, or about 3.5 percent, to $21.99 on the New York Stock Exchange.
The world's largest automaker on Tuesday outlined a plan to cut white-collar pension and health-care expenses, slash its dividend and trim executive salaries as part of its latest bid to avert bankruptcy. However, the cuts did not get a strong endorsement from Wall Street analysts.
"We continue to be disappointed by the limited cash savings targeted by current restructuring efforts," Lache said in a report. "Our concerns go beyond the ongoing market share erosion, uncertainty over the GMAC sale, and uncertainty over (parts supplier) Delphi."
GM said the cut in its dividend alone will reduce its yearly cash payout by about $565 million. Cash savings from the health-care changes will grow to about $200 million within five years.
Lache said the latest round of cuts is seen as a way for GM to come back and ask union workers for more concessions. He said there also appears to "be an ever increasing probability of confrontation with the United Auto Workers."
The biggest threat to GM's stability still remains a union strike at Delphi, Bear Stearns analyst Peter Nesvold said in a report.
Negotiations involving the UAW, General Motors and Delphi appear to have made little progress on the restructuring of the parts maker. Delphi sought bankruptcy protection in the fall.