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GM's Market Capitalization:

Maybe GM's woes shouldn't surprise anyone, but I find it remarkable that not only is GM's stock trading at a 34-year low, but also that its market capitalization is $5.65 billion. That is less than 4% of Toyota's market capitalization of of $144 billion.

This is particularly striking given GM's enormous size and still-significant market share in a major industry. Another way of looking at it: Google's market capitalization per employee, admittedly higher than most companies', is $8,641,679. GM's is $21,241 per employee.

Of course, GM is saddled with enormous legacy costs, a shift away from its most profitable products, etc. But still, it is remarkable that the entirety of its market value equals about half a year's wages for each of its employees.

Toxic (mail):
Most companies aren't on the brink of bankruptcy.

GM is.

Hence the collapse in market capitalization. The best case scenario is a government bailout; worst case C11.
7.2.2008 4:36pm
Toxic (mail):
Also the market cap for google is 8,641,678. That confused the crap out of me for a minute since it seemed to prove the opposite of your point.
7.2.2008 4:38pm
Malvolio:
The best case scenario would be to sell its assets to some car company that knows how to make cars people actually like. Toyota comes to mind.
7.2.2008 4:48pm
genob:
For similar intra-industry comparisons, compare the market caps of just about any major airline to that of Southwest.

e.g. United - Around $500 million; Southwest somewhere near $10 billion.
7.2.2008 4:51pm
Michael F. Martin (mail) (www):
The inevitable result of the Sloan, Brown, and DuPont theory of accounting in a globalized world.
7.2.2008 5:07pm
wranger5 (mail):
What is GM's per-vehicle cost for retiree health and pension benefits? What is Toyota's? I'd guess that GM can make vehicles that people want, but can't price them as competitively as other companies not saddled with its legacy costs. In the absence of a government bailout or bankruptcy, though, there wouldn't seem to be much likelihood of them working out of the problem.
7.2.2008 5:11pm
pete (mail) (www):
I wanted to check what its P/E ratio was to see if it might be undervalued and its earnings are currently
-82.17 per share with sales of $320 per share. And that is with it trading at less than $10 a share. Those are not good numbers.

But given that I never even considered buying a GM when I was in the market for a new car a couple of years ago, this should not have been that much a surprise to me.
7.2.2008 5:42pm
Michael F. Martin (mail) (www):
Pete,

Part of the problem is that you're looking at an income statement that includes many non-cash charges and income.

I'm not going to say whether or not GM is a good buy at this price. I just want to point out that with only the information provided in its publicly available financial statements, it's not at all easy to figure out what the trajectory for its cashflow is like.
7.2.2008 6:08pm
pete (mail) (www):

I'm not going to say whether or not GM is a good buy at this price.


I am too much of a coward with my money to ever buy individual stocks. But often P/E ratios are a good start to see if a company is undervalued and I have helped some friends who were not cowards make a good bit of money by picking out well known stocks that had been undervalued, but where it is obvious that the company will make a comeback eventually. With GM it is not obvious at all and even if I was not a coward I would hesitate to buy unless I spent a lot more time studying it.

I used to have a series 7 license and sold mutual funds and since leaving the business a while back for the most part do not even pay attention to how my funds or the stock market in general are doing since it is too stressful and I have no control over it.
7.2.2008 6:35pm
Malvolio:
What is GM's per-vehicle cost for retiree health and pension benefits? What is Toyota's?
I missed the part where I care.
I'd guess that GM can make vehicles that people want, but can't price them as competitively as other companies not saddled with its legacy costs.
If we are going to ignore price, I want a Veyron!

Look, I don't know exactly how GM crashed through this particular guardrail. Maybe they should have just shut down North American operations 20 years ago. Maybe they should have hire more union-busting goon 80 years ago. All I know is: I would soon be dragged behind a Honda or Toyota than be seen driving the average GM tow-truck-fodder -- and to judge by its market cap, most people agree with me.

So: let it go. Toyota and its employees can make a good car at a good price -- they can and therefore they should. GM and its employees cannot -- and therefore shouldn't. Instead they should all be forced to find jobs they can do.
7.2.2008 9:43pm
Crane (mail):

I'd guess that GM can make vehicles that people want, but can't price them as competitively as other companies...


An anecdote illustrating this point: my boss owns a foreign-made minivan with sliding doors on both sides. She was once at a social event talking to a GM corporate guy, who asked her why she hadn't bought American. She said she would have liked to, but she really wanted the driver's-side sliding door and GM wasn't offering that feature at the time. The GM guy said, yeah, they knew buyers wanted that, but corporate decided it would cost too much.
7.2.2008 10:38pm
Dotar Sojat:
wranger5 - GM can design cars as well as any other company, Japanese or American. The problemm is that after the design is complete, The engineers have to back out features and quality to account for the premium in UAW legacy costs that goes into the cost of production of each vehicle. That is the only way GM can come close to being price competitive. The simplest, though not complete, fix for GM would be the three words that strike fear and revulsion into the hearts of the UAW - "Twenty Dollar Co-pay."
7.3.2008 9:35am
Xmas (mail) (www):
So, the questions are...

Is GM's market cap worth less than the steel in it's buildings, the equipment on it's floors and its current inventory of parts and vehicles?

What obligations would someone have to GM's employees and former employees if they were to swoop in and sell-off everything?

How much would Congress scream and shout if someone did that?
7.3.2008 11:46am
SeaLawyer:
I hope GM can rebound. The new Chevy Malibu can compete against anything Japan is putting out right now. Only Ford builds a truck that can match Chevy/GMC. On the SUV front only the Jeep Grand Cherokee matches up with them in the midsize and no one else even comes close on any of their other SUV's. Of course I am talking about actually using the SUV for things that they are meant to do, not just bringing the kids to soccer practice. The big problem right now is the price of gas with is killing truck and SUV sales across the industry.
7.3.2008 1:11pm
Snowdog99 (mail):
What do you expect when a large corporation has to pay around $28 per hour for labor a chimpanzee could perform? (although, with all due respect to our simian cousins, the average UAW worker probably isn't as bright).

A few years ago, I did some consulting work for GM, and talking to the plant engineer, discovered that most of these clowns perform less than about 3 hours per day of *actual work*. To make matters worse, when the plant (located in beautiful Flint, MI) tried to crackdown on union thugs smoking weed in their pickups during coffee break, the UAW swooped-in; threatening to file grievances.

Now, these illiterate goofs get to get high at least 3 times a day if they're so inclined. Great way to run a business, eh? I could care less if they sacked every last one of those toss-pots.
7.3.2008 2:02pm
Randy R. (mail):
Market cap is down? The company is sliding towards bankruptsy? I guess that means the CEO gets a $25 million bonus!

Oh that's right, it's always the fault of the line workers, never the managers....
7.3.2008 4:45pm
some sense:
Wranger:

Having been pricing cars in the very recent past, I can tell you that Toyotas are more expensive, generally, than GM cars.

Why then, is Toyota selling more than GM? I am sure it is based on practically everything other than price.
7.3.2008 5:54pm
Eric Rasmusen (mail) (www):



http://finance.yahoo.com/q/bs?s=GM

says that GM's assets are 145 billion, and its liabilities are 187 billion dollars (biggest component "Other Liabilities" in LT liabilities) . I didn't look further into the details. Perhaps the pension liability is the real owner of GM now.
7.3.2008 8:52pm
ramandeep (mail):
well dont know gm is a good buy or not, but one thing is for sure GM is an american legacy and its fall out should be prevented with full force. usa wants to will wars and spends billions on improving it tech. and weapons.... mr. president this is also a war... a war wih slowdown, ressecion, deflation, retenchments, etc.. come on role up your selves and get together to fight with it. show the world that yes america can do it.. gm will again be the best auto company in the world.
for this the management, labours, unions, government, investors, and every american have to come up and fight this war with only one intention... TO WIN

ramandeep
11.20.2008 1:48am
klimmklimm (mail) (www):
Perfect work!
Gluttony kills more men than the sword.
Good health is above wealth

[url=http://buy-xenical-online-klim.blogspot.com/][/url]
9.20.2009 8:24am
petrarka (mail) (www):
Perfect work!
9.24.2009 9:34am
petrarka (mail) (www):
Perfect work!
9.24.2009 9:35am
petrarka (mail) (www):
Perfect work!
9.24.2009 9:35am
petrarka (mail) (www):
Perfect work!
9.24.2009 9:35am

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