The folks in Detroit may be pleased to see Toyota Motor Corp. (NYSE: TM) cutting its sales forecasts, but the pleasure is sure to be short lived. Despite its more modest outlook, Toyota leads General Motors (NYSE: GM) in global vehicle sales -- and its lead is only getting bigger.
According to a report on Reuters, GM sold 4.54 million vehicles worldwide in the first two quarters of 2008. This represents a 3% drop from the same period last year. Although sales in Europe, Latin America and Asia actually rose, the General couldn't overcome a whopping 15% decline in North America.
Toyota, on the other hand, saw a 2.2% increase in global sales, to 4.8 million units. This gives Toyota a lead in the range of a quarter million vehicles or more. And with its global sales growing, the lead is likely to widen, especially as Toyota switches over to producing more efficient cars in North America and fewer of the wasteful trucks that Americans loved so much until just a few weeks ago.
As Autoblog points out, the sales crown is important to both companies, although neither will admit it publicly. GM was the global sales king for 77 years, and the loss of that title will certainly hurt. Last year, the sales race ended essentially in a tie. But with these results, it looks like Toyota will be the champ in 2008 and, in all likelihood, beyond.
General Motors (NYSE: GM) has finally come up with something to save its bacon. It will team with a number of utilities including Con Edison (NYSE: ED) and Duke Power (NYSE: DUK) to create a broad market for electric cars.
According toThe Wall Street Journal, "Auto makers need the cooperation of utilities since they control the new technology's primary fuel -- electricity -- and must make sure that the vehicles' recharging processes mesh with the electricity grid and don't inadvertently undermine grid reliability." In other words, no one wants the cars to cause brown outs. GM also plans to negotiate special rates to make its electric cars cheaper to recharge.
The announcement is one of GM's first intelligent moves in a long time. It has allowed its reliance on pickup trucks and SUVs to drive down its sales and cut its market share in the US. Foreign rivals that kept lines of smaller cars now have products with broad appeal to consumers. This is particularly true of their hybrids.
GM's concern remains whether being late to the market will make it too late. Its potential customers want fuel-efficient cars now, when the price of gas is high. GM will lose billions of dollars while it tries to catch up.
The competition will not be sitting still.
Douglas A. McIntyre is an editor at 247wallst.com.
Struggling mortgage lender Paragon is reportedly in talks with The Blackstone Group LP (NYSE: BX) about a potential takeover by Blackstone, the Financial Times reported.
OTHER PAPERS:
The New York Times reported that TiVo Inc (NASDAQ: TIVO) will today introduce a "product purchase" feature in partnership with Amazon.com Inc (NASDAQ: AMZN). Under TiVo's plan, the television remote control will be turned into a tool for buying products that are advertised and promoted on talk shows and commercials.
Stocks futures are lower Tuesday morning, indicating U.S. stock markets will start on a down note following weak outlooks and disappointing financial results from several companies including Apple and American Express. With oil steady and no economic data out today, Wall Street will focus on earnings.
Apple Inc. (NASDAQ: AAPL) reported after the close Monday a record quarter that beat analyst estimates, posting a 31% surge in earnings. Mac and iPod sales satisfied investors, while iPhone sales were somewhat on the lighter side. What concerned investors most was the very weak guidance Apple gave, which was weak even by Apple's standards of lowballing. Other issues included margin squeeze and Jobs health. Apple shares were 10% lower in Frankfurt and premarket trading. American Express (NYSE: AXP), said late Monday its second-quarter results fell 38% due to the weakening economy. The company, which missed projections, caters to the more affluent who have good credit, and yet even this company felt the pains from the slowing economy. AmEx earned 56 cents per share compared to estimates of 83 cents per share. The company's stock tumbled AXP shares are down over 12% in premarket trading.
Also reporting Monday after the close were Merck & Co., Inc. (NYSE: MRK), Texas Instruments (NYSE: TXN) and SanDisk (NASDAQ: SNDK). MRK shares are down over 6.6% in premarket trading as the company said it would stop give guidance of results. TXN shares are also declining over 10.5% in premarket trading after it gave a disappointing forecast. SNDK shares are plunging over 16% in premarket trading after it swung to a Q2 loss, missing analyst estimates.
This morning we'll have another wave of earnings, and already started were DuPont and Wachovia.
Giving some thought to what in the world Mr. Gramm was thinking about (or not), it seems to me that his angst last week about Americans being a bunch of whiners was quite self referential. He obviously has lost his sense of balance and is spending too much time with the country club crowd to realize that some folks are feeling true pain.
Unless he is getting free gas or his limousine driver is not speaking with him then how could he have missed the fact that everyone in our country has seen a rapid and significant rise in prices. Ask anyone driving a truck for a living, just as a sampling. I would not consider their plight frivolous.
For some reason he has also missed the fact that all three of our major automobile manufacturers Ford Motor (NYSE: F), General Motors (NYSE: GM), and Chrysler (now privately held) are teetering on bankruptcy.
I have been fortunate enough to have traveled to the four corners of the United States, Alaska and Hawaii and I would actually say we tend to be overly optimistic at times in the US. By comparison many of the 25 countries I have had the chance to visit can be some what negative. I would place us somewhere in the middle.
2008 will be the year that both General Motors Corp. (NYSE: GM) and Ford Motor Co. (NYSE: F) went down in recent history as the complete sandbags those companies have really become. Both are losing money hand over fist (save for Ford's most recent profit surprise), and are struggling with trying to provide vehicles customers actually want to buy -- as distinct from vehicles they were projecting to produce.
GM CEO Rick Wagoner said recently that a GM bankruptcy won't be coming, although the automaker then announced it would be laying off even more workers as it digs and scratches its way to some type of profitability. A question then came up in the market again: would a foreign auto company be willing to take a stake in either American icon? How about those up-and-coming Chinese automakers who are cranking out fuel-efficient cars by the boatload and could be seen as very eager to enter the U.S. market?
Not so fast -- according to The New York Times, Chinese automakers are not interested. Not interested in equity stakes or even buying asset pieces from either American automaker. GM's recent sale notice for its struggling Hummer division and Ford's recent sale of Volvo didn't even register on the radars of Chinese auto companies, according to the report.
It's hard to see any company buying Hummer (except a military contractor) with global fuel prices where they are, but Volvo would be a neat catch for a company wanting to expand beyond a single global region. Ford doesn't have a buyer yet, but a deal could be announced any day now. Still, Chinese automakers may be smarter than to partner with or buy into two currently dead weights in the vehicle business. There are plenty of other global auto partners besides GM and Ford.
I've never used a motorcycle before in my life and don't know much about the vehicles, but I recognize that Harley-Davidson, Inc. (NYSE: HOG) is an American icon whose product represents an aspirational brand. Even so, the company and its stock finds itself on hard times. The company's latest earnings report is reflective of the current economic malaise.
The first paragraph of the Q2 release tells me almost all I need to know. Revenues declined almost 3% to $1.57 billion. Net profit on a dollar basis dropped sharply by 23%, coming in at $222.8 million. Diluted earnings per share decreased by nearly 17% to $0.95. These numbers are not good. Also, in terms of cash flow, cash was used to fund operations for the first six months of the fiscal year as opposed to being generated. Yet another negative.
As I write this, Harley-Davidson's stock is up well over 7%. Am I impressed? Not enough to buy. Undoubtedly some of this rise can be attributed to the retreat in oil futures. But do I believe the economy will now be nice to Harley-Davidson? Not yet. The company, like General Motors Corporation (NYSE: GM) and Ford Motor Company (NYSE: F), will still have a rough time selling things that require fuel to run. According to this article, Harley-Davidson did better than expected, but that's little comfort to me. You can make an argument that the stock is cheap, but at the very least, anyone interested in buying it (again, I'm not) better wait till the euphoric rally of the day has faded.
Disclosure: I don't own any company mentioned; positions can change at any time.
We have heard a lot of news over the past 12 months about soaring fuel prices and the effect it is having on the major automakers. With record-high oil prices, and gasoline running about $4.10 a gallon, drivers are spending more and more money to fill up their tanks. One of the natural options for people has been to move towards less expensive, small, and simple cars. General Motors Corp. (NYSE: GM) noticed that fuel-efficient vehicles will be more appealing to consumers, and announced last week plans to reduce production at its truck division (a bit late to join the party, but at least it's something for the struggling auto maker). Toyota Motor Corp. (NYSE: TM) is also slashing truck production during three months at its U.S. plants.
While It is true that most less expensive cars don't offer the same luxury when compared to sedans or SUVs, they come with a lot of options that can satisfy every individual need. Among the cheapest cars available, the article points out Honda's Fit ranked No. 11 at $13,950, a small car whose standard version comes with an adjustable steering column and four-speaker audio system, and is equipped with multiple airbags in the front, rear and side. Other vehicles that follow the same logic are the Chevrolet Aveo, ranked No. 2 at $11,460; the Toyota Yaris, third at $11,550, and the Kia Spectra, fifth at $12,895.
Ya don't say? And here I was thinking it depended on the Yen carry trade.
But in a way, that headline is a wonderfully succinct illustration of why the odds of a successful turnaround at General Motors (NYSE: GM) are basically zero. The company has a crippling debt load and a cost structure that isn't even close to being competitive with the infinitely leaner Asian automakers which, by the way, make cars that are more relevant.
GM brass are sounding an optimistic note on their upcoming car introductions, and maybe they will improve. But the company has a difficult task: slash costs while restoring the company's brand positions. Either of those would be difficult, and both at the same time is probably impossible. The company is at a competitive disadvantage that is simply massive, and its decline has gained additional momentum from the decline of its brand equity. If GM didn't already exist, people would laugh at the idea: "Let's have a huge debt load and a really high cost structure and sell cars that are almost as good as our foreign competitors."
When I think about it like that, it's hard to find a reason to even consider investing in the company's stock.
Nokia Corp. (NYSE: NOK) shares are up over 7.4% in premarket trading after the world's largest maker of handsets said second-quarter profit fell 61% to $1.75 billion, or 46 cents per share, while sales rose 4% to $20.87 billion. Excluding items, Nokia's profit rose 8% to $2.18 billion. Nokia beat estimates of earnings of 56 cents per share on $20.05 billion in revenue, according to Thomson Financial. The mobile phone maker slightly raised its forecast for the mobile phone industry, saying volume would grow 10% or more in 2008.
Continental Airlines (NYSE: CAL) are up again this morning after climbing 38% Wednesday with the rest of the airline stocks. Continental swung to a second-quarter loss, hurt by record high fuel prices and weakening economic conditions. Still the losses of $3 million, or 3 cents per share, or excluding one-time items totaled $25 million, or 25 cents per share, beat expectations of a loss of 49 cents per share.
Yum Brands (NYSE: YUM) shares are down 4.3% in premarket trading after it reported a second-quarter profit of $224 million, or 45 cents a share. Revenue rose to $2.65 billion from $2.37 billion a year ago. While this beat estimates, and while the company raised its earnings growth forecast for the full year to 12% from 11%, investors were concerned about rising food costs which hurt profit margins in the second quarter.
It seems that Apple Inc. (NASDAQ: AAPL)'s new 3G iPhone was sold out in Germany after less than a week. Deutsche Telekom AG's T-Mobile division sold 15,000 iPhones and it's not clear when Apple will be able to deliver more iPhones for the German market, Financial Times Deutschland reported.
Today was nothing short of a wild trading day and despite the levels seen at the close it is still a toss up over whether the bulls or bears won today. Merrill Lynch has said that the commodities cycle may have peaked in the first half of this year. It noted that the S&P/GSCI commodity index was up roughly 41% during the first half of 2008, which is the largest gain since the index inception. This may have only been one factor, but oil fell as much as $9.00 per barrel in the biggest one-day dollar drop since 1991. We did even briefly see the VIX hit that magic 30.0 reading. Below are the unofficial closing bell levels:
Genentech, Inc. (NYSE: DNA) rose today despite a weak earnings report and despite it saying it was going to act like an old industrial company with a share buyback plan. Shares were up over 5% at $79.37 in todays final minutes.
General Motors Corp. (NYSE: GM) shares fell in early trading as Wall Street viewed the company's announcement that it plans to raise as much as $15 billion through the end of next year by suspending its dividend, cutting its salaried workforce and selling assets with skepticism.
For one thing, who is going to want to buy the assets GE is trying to sell? For instance, sales of Hummer were down about 60% in June. What private equity player will take a chance on buying a brand synonymous with gas guzzling as gas sells for more than $4 a gallon at the pump? Who is going to want other lackluster GM brands like Saturn? Any new owners of the business will face the same problems as GM.
Also, let's not forget the rising prices of commodities used to make cars, such as steel. Hyundai Motor Co. announced today that it was raising prices on its cars because of increased costs for raw materials, according to Reuters. Soaring oil prices also is making the costs of plastics needed for car parts rise.
General Motors (NYSE: GM) is recently trading at $9.53 in pre-open trading, above its close of $9.38.
GM will suspend its dividend, decrease capital spending, lower salaried cash costs by 20% and bolster liquidity by $15 billion through 2009.
GM July 10 straddle is priced at $1.20. GM August option implied volatility of 119 is above its 26-week average of 65 according to Track Data, suggesting larger price fluctuations.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
TheStreet.com's Jim Cramer says our problems are so widespread, he sees lots more IndyMacs before we're out.
You don't need me to tell you it's awful out there. You don't need me to tell you that there's no quick fix for any of these things. But what might help you understand why it feels so bad this time is that I have never, in my career, seen so many companies go off track at the same time. This is one unbelievable moment, and it is made more horrible by the day as companies' stocks just get pummeled, causing people to then question the very viability of the companies involved.
First, obviously, are Fannie Mae (NYSE: FNM) (Cramer's Take) and Freddie Mac (NYSE: FRE) (Cramer's Take). We don't know what will happen, but we do know that their futures are much darker than their pasts. Their best hope: a Democrat becomes president and shows the usual love to both. But as investments, they are pretty much perma-losers going forward. The losses are that heavy. Yes, it is true that two years from now they will be better, but will the government let them limp through to that? View them as calls on a Democratic win.
We all know that Citigroup (NYSE: C) (Cramer's Take), Wachovia (NYSE: WB) (Cramer's Take), Washington Mutual (NYSE: WM) (Cramer's Take) and National City (NYSE: NCC) (Cramer's Take) are in trouble. Bank of America (NYSE: BAC) (Cramer's Take) says it isn't in trouble, but obviously the market doesn't believe management because the stock failed to rally when it said its dividend was safe. Any short-selling hedge fund could hire 30 actors and have them line up at a Washington Mutual or two and get a bank run going. Then we would have to hear about a "hasty" Treasury department plan to bail out WM. Hasty? How can these guys not see it coming?
Who is next to fail/fall? That seems to be the only question on investors' minds these days, and this morning is not different as concern about the health of the financial sector grows. With global markets plunging overnight, the dollar falling to yet another record low against the euro and ahead of a day full of economic data releases and earnings, as well as a testimony from Fed chairman Bernanke, U.S. stock futures dropped this morning, indicating the market is poised for a lower open.
On Monday, what seemed like might be a promising day with the government plan to bail out Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) and several large deals including the mega beer deal between Anheuser-Busch (NYSE: BUD) and InBev. But once again financials took front stage and after IndyMac was seized by federal regulators over the weekend Wall Street tumbled. The Dow industrials fell 45 points, or 0.41%, the S&P 500 dropped 11 points, or 0.9%, and the Nasdaq Composite lost 26 points, or 1.17%.
As the day go on, investors will have more to chew on though as several economic reports are due out today. June Producer Price Index, a measure of inflation at the wholesale level, is due before the market open, at 8:30 a.m. EDT. While economists expect a smaller increase in prices in June, an increase is expected for both PPI and core-PPI, which excludes food and energy prices. At the same time, June retail sales will be released, and may show a nice increase due to the government checks. July NY Empire State Index will also be released at that time and it's likely we'll see it decline further. Then, 10:00 a.m., a reading on business inventories for May is due.
The folks in Detroit may be pleased to see Toyota Motor Corp. (NYSE: TM) cutting its sales forecasts, but the pleasure is sure to be short lived. Despite its more modest outlook, Toyota leads General Motors (NYSE: GM) in global vehicle sales -- and its lead is only getting bigger.
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Stocks futures are lower Tuesday morning, indicating U.S. stock markets will start on a down note following weak outlooks and disappointing financial results from several companies including Apple and American Express. With oil steady and no economic data out today, Wall Street will focus on earnings.
Giving some thought to what in the world Mr. Gramm was thinking about (or not), it seems to me that his angst last week about Americans being a bunch of whiners was quite self referential. He obviously has lost his sense of balance and is spending too much time with the country club crowd to realize that some folks are feeling true pain.
2008 will be the year that both 
We have heard a lot of news over the past 12 months about soaring fuel prices and the effect it is having on the major automakers. With record-high oil prices, and gasoline running about $4.10 a gallon, drivers are spending more and more money to fill up their tanks. One of the n
The prestigious 2008 No Kidding! Award For Obviousness in Financial Journalism goes to the Associated Press for this headline: 
General Motors Corp.
General Motors
Apple shares rise on report Steve Jobs is free of cancer
Toyota whups GM in the first half of 2008
Bush: Wall Street got drunk!
