I read an article a few days back that had a great quote. It went something like this, “Great companies
anticipate events and trends, not react to them.”
There is no giant company that I can think of that better defines the antithesis of this quote than General Motors. I’m only able to read and analyze the same information about GM that is widely available to everyone else. Based on the “writing on the wall,” it’s become pretty clear to me that this company is spiraling downwards to a point of no return.
CEO Rick Waggoner’s latest announcements only served to reinforce this point. That says a lot in itself. Instead of trying to implement any sort of creative or innovative solutions, we’re seeing last ditch efforts to cut costs and streamline operations to avoid death (i.e. once again reducing salaried workforce, cutting bonuses, cutting retired healthcare benefits, reducing capital spending by another $2 billion.) Per my opening statement, we’re also witnessing a company that simply doesn’t have the ability to make strategic moves that will lead the market versus not even being in the game (i.e. understanding the impact of oil, having no viable hybrid strategy, failing in electric cars, failing with diesel engines and the list goes on…).
But, what truly scares me the most are what seems like almost delusional comments that continue to come from Mr. Waggoner. His latest quote this week was, “Even under conservative planning scenarios, GM is well positioned to withstand the U.S. market downturn and emerge a stronger company.” That comment alone should make any GM investor (those that still exist) sell all its stock immediately.
Think about it, in the best of times (like the last three years), the behemoth has continued to hemorrhage out of control. Now the company faces its single greatest challenge to date (the ever rising price of oil and its enormous impact on consumer spending,) yet his outlook remains rosy in the long run?
Then there’s the other ultra-sensitive issue (which could become an entirely new blog post by itself.) Is Mr. Waggoner offering up a realistic prognosis of the company’s health (er…the truth,) or is he acting like other former CEO cheerleaders (think about those from Bear Stearns and Enron) in the hopes that there won’t be a run on the stock? Think about it, these days public company CEOs have a real quandary when their companies are in deep trouble. Their first consideration always has to be to shareholders. So, by not being candid, or at least more open about negative implications taking place, they could be defrauding investors. Then again, the short sellers in today’s market have enormous power to drive a stock into the ground at the hint (or gossip) of real bad news. In those cases, where the stock plummets, most shareholders lose as well.
It’s hard to believe that there isn’t more to the GM story not being told to us. I know we’ll find out soon though… as the march continues.
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