After months of speculation, General Motors Corp. has finally admitted that the likelihood for survival outside of bankruptcy is slim.
The automaker filed its 2008 annual report with the Securities and Exchange Commission today. In the 10-K filing, GM’s auditors, Deloitte & Touche LLP, admitted that a chance at viability was remote.
“The corporation’s recurring losses from operations, stockholders’ deficit, and inability to generate sufficient cash flow to meet its obligations and sustain its operations raise substantial doubt about its ability to continue as a going concern,” Deloitte & Touche auditors wrote in the report.
During the past three years, GM has lost $82 billion.
GM’s stock has dropped $0.31 per share today. It was trading at $1.89 as of 10:35 a.m. In late 2007, by comparison, the stock was trading at about $30 per share.
Though GM still has until month’s end to engineer concessions from debtholders and union workers, it seems the auto giant is nearly giving up hope.
It looks like March 31 might become “B”-Day for GM.
Click here for GM’s 2008 annual report.
What happens to the Tax-payer money? Did we get liquidation preferences? Did we get collateral? Did we get sc$&$(!@d?
It is sad to say, but so true. The stimulus package does not seem to offer a resolution to the inevitable fate of our auto industry. People are afraid to buy because they are unsure of the future. what does happen to the tax-payers money? How are we to win in this? moving water from one pool into another does not change the fact that at some point both pools will be empty. Is restructure through bankruptcy the logical choice in this?
The concept of fairness has been based on the assumption of a 100% payment ratio (no delinquencies, repos, no collection activity, no cost of servicing the account, etc) so it seems that the new norm is that pricing according to the risk seems “abusive”; we are not to far from legislators deciding who can and who cannot get financing; preventing people from getting credit will hurt them in the long run. Consumer groups insist that a big number of customers do not understand the financial transaction but lack pointing the enormous resources the industry makes available to enhance financial literacy and also lack of a basic understanding of one the premises of consumer behavior “if the customer wanst it, the customer is going to get it”. Pretty soon will hear that buying a pair of sneakers for $150.00 when the cost was $9.00 is abusive and it should be a price cap of $5.00 for all sneakers.