Will GM North American be hauled off to the upper echelon of the corporate junkyard which is reserved for similar, highly leveraged business disasters?

Yesterday, even though the UAW administration and the AAM brass resumed closed-door negotiations, full union-side bargaining teams were disbanded as Local Union officials were ejected from their places at the negotiating table and sent back to their home factories. This denial of basic representation has sent shock waves though the rank and file strikers. The result of this betrayal by the UAW adminstration, dismissing the reps in such a manner, is manifold. But on a tender note, it has raised the stakes even higher. It's being decided now how much more the strikers will need in the settlement to save face due to this heavy handed snubbing brought about by the UAW's miscalculation.

News of yesterday's mistep has rippled through financial markets, once again raising the profile of the incredibly powerful and crippling strike. Wading through the never ending cascade of this corporation's lies, distortions and its need to avoid panic, the analysts have once again sussed out the truths. GM's media spin about the troubles it faces, factors such as - high fuel prices, government regulation, transplant product, recalls, layoffs, lost production, sluggish sales, surplus product, thousands of vehicles per day inventories - has not covered up the deep, catastrophic woundings that this 18 day-old work stoppage has inflicted. Nearing closer towards deaths door, GM hasn't as yet been able to shield those prying eyes from the anticipated sales figures collapse that they will endure by the middle of the quarter. GM has vowed to continue their hand sitting activities til then.

The reality is that the AAM talks broke down completely, and this has triggered a predicable plunge in earnings per share of GM stock. As the stock analysts cut estimates, they point to the most salient negative factor - a genie call 'AAM on Strike' - that GM tries over and over and over to stuff back into the bottle. Once the word spreads, every advisor will place the ratings of AAM and GM on the watch list, and for each percent drop in value, there will a corresponding broadening of the forecast to a full year loss.

Corporate GM has the capacity to innovate and turn this fiasco around for themselves, the rank and file AAM strikers, and their own hourly workforce across North America. But, using their 19th century robber baron strategies in a 21st century integrated marketplace has destined their now junky company onto the path that leads only to the slagheap.

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GM shares tumble to nearly 2-year low
The Associated Press March 13, 2008, 1:00PM ET

NEW YORK

Shares of General Motors Corp. tumbled to its lowest point in nearly two years Thursday, pulled down by a drop in the overall market and worries about its future profits in light of disappointing February U.S. sales.

In midday trading, GM shares sank $1.57, or 7.5 percent, to $19.36, after dropping to $19 earlier in the day and easily passing its previous low of $20.74.

The drop marked the Detroit-based automaker's lowest stock price since April 2006.

Morgan Stanley's Jonathan Steinmetz cut his price target for GM by $3 to $27 and lowered his earnings estimates, citing its poor February sales, disappointing fourth-quarter results and weaker industry sales expectations.

Steinmetz backed his "Equal-Weight" rating, but flipped his 2008 earnings prediction to a loss of $1.30 per share from a profit of $1.30 per share.

Analysts, on average, expect a loss of 34 cents per share for 2008, according to a poll by Thomson Financial.

Steinmetz said he now sees a $1.7 billion deterioration in North American auto pretax income for 2008. He projected free cash usage of $4 billion for 2008, which implies about $1.2 billion related to restructuring expenses and support for Delphi Corp., GM's former parts division, he said.

In addition, about $3 billion of debt and capital leases mature in 2008, the analyst said.

Steinmetz said that for Morgan Stanley to become more positive about GM shares, it would need to see sustainable annual automotive free cash flow of more than $3 billion by 2010.

"While this is a low bar on cash flow relative to revenue (just 1.5 percent cash flow margin) it is meaningfully above current levels and we need a better path to achievement," Steinmetz said.

"We see large upside optionality if GM can get to a 1.5 percent to 2 percent cash flow margin, but that has been the case for years."

Thank you,
John Martyn