TheStreet.com's Jim Cramer says their products just don't have the demand to compete. General Motors (NYSE: GM) (Cramer's Take) joins the list of unthinkables, the ones that may not be able to make it with its current structure. The ones that basically need to be Chapter 11'd to save the business from dying.
Typically there would be some price where the value guys come in, those suckers who buy things like Ambac (NYSE: ABK) (Cramer's Take) at $6 on a secondary, or Citigroup (NYSE: C) (Cramer's Take) at $25 or Merrill Lynch (NYSE: MER) (Cramer's Take) at any price.
Typically there are big mutual funds with an inclination to say, "You know what? The market knows nothing about GM, and I want to buy it."
That isn't the case this time. I wonder if the value guys are running out of money.
Or maybe they are doing some homework and realizing that $4 gas simply ended the viability of this company and would probably end the viability of Ford (NYSE: F) (Cramer's Take) if the prices stay up. GM does not have enough cars in demand that it can make a profit on, and it has way too many cars and trucks that aren't in demand to do anything but lose billions of dollars, despite the decline in headcount and costs per car. It feels like the Citigroup of the autos. Without the deposit base.
We marvel that this can be happening but the falloff in sales is so pathological that I don't see how these two just don't run out of money.
The amazing thing is that GM still pays a dividend, a bountiful 7% one.
Look for that dividend to vanish very soon. If you own it, look for a bounce to sell it.
And, value guys, that may be your chance to make your move!
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RELATED LINKS:
China Watch: GM, Ford Gun It
Ford, GM Shares Slide on Credit Concerns
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Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer had no positions in the stocks mentioned.
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Reader Comments (Page 1 of 1)
6-23-2008 @ 9:14AM
Warren said...
Maybe the value guys lost all of their money on Bear Stearns because some expert told them that it was a great company to invest in. No worries!
6-23-2008 @ 10:32AM
william lindblad said...
There is but one problem with this thinking. The U.S. cannot survive without the retention of a manufacturing base. We cannot become a nation dominated by foreign interests with their facilities simply on our soil. Since the Roman Empire suffered just this fate the ultimate answer is well established.
6-23-2008 @ 12:36PM
BIG AL says said...
Are you kidding me ???!!! GM was poised to take over the world just 10 years ago with the EV-1. They could have left Honda/toyota and all the rst in the dust. The great age of American manufacturing would be back with a vengence. The greedy little turds let it all slip through their slimy fingers. GM deserves what will happen next. They have only themselves and the oil industry to blame. Sign me, "waiting for my plug in car."
6-23-2008 @ 3:23PM
Al said...
What wrong with GM is not with GM. It's these so called auto experts and reporters constantly hammering negatives about GM. For example, the Hummer gets pick on all the time when Toyota has the same gas guzzling SUV.
http://www.internetautoguide.com/new-cars/03-int/toyota/land-cruiser/index.html
The internet is full of half truths, complete false stories, over and over. Tom Friedmen from the Time compared GM with Hitler. I know people got burnt by GM but they are sure paying for it today.
6-24-2008 @ 11:23AM
BOB said...
GM is what caused $4 gas with all their gas guzzling vehicles. GM, their employees, and their stock holders deserve what they get.
6-24-2008 @ 12:06PM
jpdr1100 said...
The Toyota Land Cruiser is not a Japanese Hummer. The LC has been built for decades, and was traditionally sold to people who actually needed to go off road. It was not an invented model to cash in on yuppie fantasies, like the Hummer.
And even your link, Al, lists the EPA mileage for the Land Cruiser. You won't find those numbers for the Hummer H2 because it's so huge, it falls outside the EPA's jurisdiction and thus doesn't even get rated. And GM won't tell you how bad the mileage really is.
Truth in internet postings starts at home.
6-24-2008 @ 3:09PM
ron mayfield said...
Bob you must owned a lots of Jap stock. If we lose the big 3. We will be under a different flag.
6-24-2008 @ 9:27PM
pcsario said...
"Warren said...
Maybe the value guys lost all of their money on Bear Stearns because some expert told them that it was a great company to invest in. No worries!"
^LMAO... so true.
Jim Cramer: "Invest in Bear Stearns! Everything is OK with the company!"
6-25-2008 @ 10:05PM
Ernest Payne said...
This "guru" just now figured out that GM, Ford, and Chrysler are going to be history? And people pay attention to someone this far behind the times? The mind boggles. The death of GM has been obvious for decades given its track record of dreadful management.
6-26-2008 @ 5:03PM
C. Buchanan said...
Why don't GM and Ford have a sale and tell the dealerships to stop screwing people, and just maybe they will sell some cars even with the hurricane "Rita" type press coverage this "fuel crisis" is generating. ...people are sheep. Here are your problems 1. the IRS 2. Credit card companies 3. Bankers (who got fat lending to people who could not afford to buy and now won't lend to help them out) The so-called folks with money are greedy as hell and the rest of us will pay dearly while they try to hold on to those caviar lifestyles by any means necessary.