This is part of a weekly series about the car business. The auto industry plays an important role in the global economy, and record-high oil prices and a global slowdown have contributed to a crisis in the sector. This column will highlight some of the interesting stories that emerge as that crisis plays out.

"These are truly unimaginable times for our industry."

Car Biz: Detroit to world: Buddy, can you spare a billion? originally appeared on BloggingStocks on Sun, 26 Oct 2008 20:00:00 EST. Please see our terms for use of feeds.

In 1945, when President Truman first proposed national health insurance, they [union leaders] cheered. In 1947, when Ford offered its workers a pension, the union voted it down. The labor movement believed that the safest and most efficient way to provide insurance against ill health or old age was to spread the costs and risks of benefits over the biggest and most diverse group possible. Walter Reuther [the national president of the U.A.W at the time]...believed that risk ought to be broadly collectivized. Charlie Wilson [president of G.M.], on the other hand, felt the way the business leaders of Toledo did: that collectivization was a threat to the free market and to the autonomy of business owners. In his view, companies themselves ought to assume the risks of providing insurance.

GM, Ford get in line for government funding originally appeared on BloggingStocks on Wed, 17 Sep 2008 15:15:00 EST. Please see our terms for use of feeds.

And there's more trouble in the mix. Cerberus said in a New York Times story that Chrysler is meeting "every financial metric." But Cerberus considers the world's current economic turmoil to be a temporary problem, not the economic world change that it actually is. Meanwhile, Chrysler CEO Bob Nardelli is smiling because Cerberus has given Chrysler lots of money, and he gets to cut heads.

Continue reading Can Nardelli and Cerberus possibly make money with Chrysler?

Can Nardelli and Cerberus possibly make money with Chrysler? originally appeared on BloggingStocks on Wed, 27 Aug 2008 14:20:00 EST. Please see our terms for use of feeds.

MAJOR PAPERS:

• Steven Spielberg and his DreamWorks Animation SKG Inc (NYSE: DWA) partners are close to signing a deal with India's Reliance ADA Group for between $500M and $600M that would provide financing to the company as it prepares to leave Viacom Inc's (NYSE: VIA) Paramount Pictures this year, the Wall Street Journal reported. DreamWorks will seek to obtain an additional $500M in debt financing to make about six new films a year.
• The Wall Street Journal also reported that at an investor update yesterday, The Hershey Company (NYSE: HSY) CEO David West said the chocolate-bar maker would boost spending on marketing about 20% this year and next, and slightly increased the company's long-term annual sales targets. West offered little detail on how Hershey will address its reliance on the U.S. market for revenue.

• The Economic Times reported that India's Maneesh Pharmaceuticals, a mid-sized company, bought a 51% stake in U.S.-based Synovics Pharmaceuticals Inc (OTC: SYVC). The terms of the deal were not disclosed.
• The Economic Times also reported that General Electric Company's (NYSE: GE) GE Money Financial Services, which was seeking a parter for its personal and home loan portfolios, may have called off the process after it was unable to get the right valuation.
• Bob Nardelli, the chairman and CEO of Chrysler LLC, sent a memo to employees warning them of worsening U.S. sales, the Detroit News reported. The e-mail did not indicate the auto maker would look to soon further cut production or lay off staff, a person familiar with the matter said.

Newspaper wrap-up: DreamWorks close to funding deal with India's Reliance ADA Group originally appeared on BloggingStocks on Wed, 18 Jun 2008 08:00:00 EST. Please see our terms for use of feeds.

So what do you do if your company produces mostly heavy, inefficient vehicles as gas soars past $4 a gallon? Some might say you should produce more efficient cars. But not Chrysler, which has instead opted to make gas cheaper, guaranteed!

Today, Chrysler CEO Bob Nardelli announced that anyone crazy enough to buy a heavy, high-horsepower, low-mileage Chrysler product before May 31 will be able to buy gas for no more than $2.99 a gallon for three years. Just take your shiny new Aspen or PT Cruiser to the gas station and use your special gas card; Chrysler will pick up the cost over $2.99 a gallon.

Some critics are calling this plan a cheap gimmick. But there is no denying that Chrysler is at a disadvantage relative to General Motors (NYSE: GM) and Ford (NYSE: F) when it comes to offering new cars that get decent mileage. And it is light years behind the auto design leaders, Toyota (NYSE: TM) and Honda (NYSE: HMC). So it needs some kind of gimmick to help its dealers clear out the cobwebs that are quickly forming on their lots.

In recent years, Chrysler has relied heavily on trucks and SUVs for sales, and its hot new cars like the Challenger are gas guzzlers. (Hey, your Hemi sure is fast! Sorry about the 11mpg!) Its lineup is in desperate need of an overhaul and products that offer decent mileage. But developing new cars is difficult and very expensive, and it's not clear that Chrysler's owner, Cerberus Capital Management, has the money to do it. The alternative -- advertising and sales gimmicks, long favorites in Detroit -- is cheap by comparison.

This promotion might work, at least for a few weeks. But it points to much larger problem: Chrysler doesn't have the goods to compete right now, and it's not clear when it will, if ever.

Chrysler's desperation move: $2.99 gas for your shiny new SUV originally appeared on BloggingStocks on Tue, 06 May 2008 14:45:00 EST. Please see our terms for use of feeds.

The Associated Press reports that Chrysler has slashed the jobs of 12,000 workers -- a Halloween trick for its people if there ever was one. But is this 15% of its workforce layoff going to make Chrysler competitive?

Chrysler's cutting slow selling products and investing in new ones. Specifically, Chrysler is eliminating the Dodge Magnum wagon, the convertible version of the Chrysler PT Cruiser, the Chrysler Pacifica crossover and the Chrysler Crossfire sportscar. And it's introducing the Dodge Journey crossover and Dodge Challenger, along with two new hybrid models, the Chrysler Aspen and Dodge Durango.

Continue reading Chrysler slashes 12,000 -- is it enough to make Chrysler competitive?

Chrysler slashes 12,000 -- is it enough to make Chrysler competitive? originally appeared on BloggingStocks on Thu, 01 Nov 2007 11:46:00 EST. Please see our terms for use of feeds.

The Associated Press reports that Chrysler's 45,000 workers represented by the UAW are on strike. But they are facing Bob Nardelli, a CEO with a track record of replacing many thousands of full-time store workers with legions of part-timers, as part of a relentless cost-cutting program at The Home Depot Inc. (NYSE: HD). So there is a real question about how effective the union will be in getting concessions from Chrysler.

What are the issues?

• Whether the UAW will grant the same health care cost concessions to Chrysler as it did to GM and Ford in 2005;
• How much Chrysler would pay into a company-funded, UAW-run trust that would take on its $18 billion worth of retiree health care costs such as the one GM is creating;
• Whether the UAW can get job security pledges at U.S. factories; and
• Whether Chrysler will get the UAW to allow it to outsource parts transportation now done by higher-wage union members.

Chrysler's owner, private equity firm Cerberus, is eager to turn Chrysler profitable and sell it quickly at a huge profit. With Nardelli sporting a reputation as a cost cutter, the UAW could find itself on the short end of this negotiation. And if Nardelli's leadership of quality at Home Depot are any indication -- Home Depot slipped to last among major U.S. retailers in the University of Michigan's annual American Consumer Satisfaction Index -- Chrysler's product quality and revenues could suffer along with its workers.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Home Depot.

Will Bob Nardelli's record hurt Chrysler's striking workers? originally appeared on BloggingStocks on Wed, 10 Oct 2007 13:57:00 EST. Please see our terms for use of feeds.

Bob Nardelli's old boss Jack Welch seems to be one of the few people who think his appointment as the new Chrysler CEO is a good idea.

"This is an absolutely perfect fit,'' the former General Electric Co. (NYSE: GE) chief executive told Bloomberg News. ``They've got to get cost, efficiency, service -- all those things in line. He's the best in the world at that."

Neutron Jack goes even further saying his relationship with GE's unions were fabulous and that Chrysler has "got to have straightforward, no-baloney, on-the-table relationships with the unions there. And Bob is perfect for that.''

As I've argued before, Nardelli was a success at General Electric. Then again, he wasn't the boss either. When he got to Home Depot Inc. (NYSE: HD), he quickly became an imperial CEO who seemed to care little what shareholders, employees or the media thought of him.

Chrysler needs someone who isn't out to win any popularity contests. Tough decisions have to be made. But leaders also need to be good listeners and willing to compromise, two qualities that Nardelli just doesn't seem to have.

Bob Nardelli's appointment at Chrysler blessed by Jack Welch originally appeared on BloggingStocks on Wed, 08 Aug 2007 08:15:00 EST. Please see our terms for use of feeds.

Hey GM! Paris Hilton wants to talk to you about Hummers... originally appeared on BloggingStocks on Tue, 07 Aug 2007 15:45:00 EST. Please see our terms for use of feeds.

MAJOR PAPERS:

• With his company's stock near a 52-week low, Robert Willett, CEO of Best Buy Incorporated's (NYSE: BBY) international operations, bought nearly $500K in stock, reported Barron's Online's "Inside Scoop" section.
• In a rare instance of a foreign company being allowed into the Chinese onshore oil and gas industry, Chevron Corporation (NYSE: CVX) will develop a natural gas filed owned by PetroChina Company Limited (NYSE: PTR), reported the Wall Street Journal.
• The Wall Street Journal reported that Sun Microsystems Inc (NASDAQ: SUNW) is today expected to introduce a new microprocessor called UltraSparc T2, will be able to process up to 64 threads at one time -- most chips can handle up to four threads at a time.
• According to the Financial Times, citing a source familiar with his pay package, Robert Nardelli will college a salary of $1 a year in his new role as CEO of Chrysler, which is 20% owned by DaimlerChrysler (NYSE: DCX).

• The New York Mercantile Exchange (NYSE: NMX) is quietly selling its lower Manhattan headquarters, asking for between $600M and $700M, ahead of a deal to sell itself, reported the New York Post.

Newspaper wrap-up: Sun Micro introducing new, faster chip originally appeared on BloggingStocks on Tue, 07 Aug 2007 09:15:00 EST. Please see our terms for use of feeds.

In Monday morning news that had me scratching my groggy head, BusinessWeek reports that fired Home Depot Inc. (NYSE: HD) CEO -- and General Electric Co. (NYSE: GE) alum -- Bob Nardelli is in charge of fixing Chrysler. If someone can explain to me why this makes sense, I would like to hear it.

That's because during his tenure as CEO, Nardelli systematically destroyed Home Depot's greatest strengths -- its expert sales staff and ability to supply products that customers needed in the stores. Moreover, he has no experience in the automobile industry, which depends heavily for its success on developing cars that consumers want to buy at a price they can afford.

Nardelli is not the first manager from outside the auto industry to be parachuted in to save the day. Consider Alan Mullaly, who was passed over for CEO of Boeing Company (NYSE: BA) for another GE alum, James McNerney. Mullaly took over at Ford Motor Co. (NYSE: F) in September 2006.

Continue reading Why did Cerberus ask fired Home Depot (HD) CEO Bob Nardelli to run Chrysler?

Why did Cerberus ask fired Home Depot (HD) CEO Bob Nardelli to run Chrysler? originally appeared on BloggingStocks on Mon, 06 Aug 2007 11:52:00 EST. Please see our terms for use of feeds.

Home Depot (NYSE: HD) cut its annual forecasts for revenue [subscription required], same-store sales, and earnings. The company said that it now expects 2007 fiscal year earnings to fall 15%. Same-store sales should fall in the single digits and revenue will be off as much as 2%.

The company also said it would launch a tender offer for 250 million shares.

The huge home improvement retailer has now gone a long way to prove that Bob Nardelli, its former CEO who was so unpopular with investors, had very little, if anything, to do with the company's poor fortunes.

Nardelli may have been arrogant and too well-paid, but it was high oil prices and a damaged housing market that killed HD's stock.

Douglas A. Mcintyre is a partner at 24/7 Wall St.

Home Depot cuts forecasts originally appeared on BloggingStocks on Tue, 10 Jul 2007 07:00:00 EST. Please see our terms for use of feeds.

For the past few weeks I have been targeting The Home Depot (NYSE: HD) with a broad critique that has been echoed by the voices of frustrated readers, investors, customers and former customers. When it comes to analyzing the company's problems, Home Depot customers and employees have plenty to say! They are screaming in anger, offering opinions of the company that are very very low. Lowe's, on the other hand, has received more favorable treatment but has not gone totally unscathed either

Bob Nardelli, the ultra-arrogant ex-CEO has been criticized for a lot of what ails the company. Employees have occasionally felt that some customers are impatient, irrational, and in a few cases dishonest. We heard that stores are dirty, poorly stocked, and not organized as well as Lowe's Cos Inc (NYSE: LOW), which has much newer stores. Complaints also emphasized Home Depot's failure to make delivery commitments on contracts in a timely fashion or not at all. Customers complained often of poor service from undertrained, inexperienced, uncaring employees.

Continue reading Home Depot needs schooling -- not summer vacation

Home Depot needs schooling -- not summer vacation originally appeared on BloggingStocks on Fri, 29 Jun 2007 16:45:00 EST. Please see our terms for use of feeds.

It was quite a surprise in 2006 when Home Depot's (NYSE: HD) then-CEO, Robert Nardelli, shunned all questions from the analyst and shareholder community at the retailer's annual shareholder's meeting. In fact, Nardelli suggested that Home Depot board members just stay home, and they happily obliged. Zac covered this when it happened, and I had to get my mitts on this as well since it burns me up a bit. It never ceases to amaze me the arrogance that some corporate leaders have when it comes to answering the hard questions from the people that watch their company. Note to Nardelli: for future reference, shareholders OWN the company, and it is the fiduciary and ethical responsibility of management to answer questions and respond to the concerns of the owners. Companies do not own shareholders -- it's the other way around. Period.

Now, I know some shareholders make outlandish demands and don't act rationally at times, but neither do many CEOs and other C-level execs who can come to act like incompetent fools more than productive leaders in a billion-dollar company. At this year's Home Depot annual shareholder's meeting, an apology was prof erred for last year's disastrous decision by Nardelli (who was forced out in 2007) and the meeting went on as it should have and on a very careful footing with new CEO Frank Blake at the helm.

The sign of a leader who knows how to handle adversity and conflict is admission, and Blake gave it by admitting last year's meeting was a mistake and by taking the brunt of everything from ensuing questions. But the question remains: why did Nardelli do that last year at all anyway? Was he trying to escape questions on his exorbitant pay package and didn't want to take the heat for Home Depot's sales slowdown? As Nardelli should know by know, when yo go public, you answer to your shareholders or take on the risk of becoming a "politician" who never listens to constituents -- but will always be on the legislature floor to vote on pay raises. Now that I think of it, it's already that way inside some companies.

Studying the signs of a bad corporate leader originally appeared on BloggingStocks on Tue, 29 May 2007 19:38:00 EST. Please see our terms for use of feeds.

Building Materials Holding Corp. (NYSE: BLG) -- implied volatility is Calm as BLG closes at 30-month low. BLG, a provider of professional residential services and building materials, closed at $13.41. BLG was frequently mentioned as a takeover target in previous years on a strong housing market and chatter that Home Depot's (NYSE: HD) ex-leader Bob Nardelli would purchase BLG. RHCO says this morning, "Potential for consolidation of Pro Dealers; When will it begin?" BLG June option implied volatility of 41 is below its 26-week average of 44 according to Track Data, indicating decreasing price risks.

Masco Corp. (NYSE: MAS) -- option implied volatility suggests non-directional Risk. MAS, a home improvement company, closed at $29.15. MAS over all option implied volatility of 27 is near its 26-week average of 25 according to Track Data, suggesting slightly larger risks.

Builders FirstSource (NASDAQ: BLDR) -- implied volatility suggests Flat Risk. BLDR, a supplier and manufacturer of structural and related building products for residential new construction, closed at $16.13. BLDR has a market cap of $571 million with long term debt of $318 million. BLDR reported March 2007 quarterly total revenue of $411 million. BLDR over all option implied volatility of 36 is near its 26-week average according to Track Data, suggesting non-directional risk.

BlueLinx Holdings (NYSE: BXC) -- options suggest non-directional risk. BXC, a distributor of building products, closed at $10.88. BXC has a market cap of $339 million with long term debt of $522 million. BXC reported 2006 annual revenue of $4.8 billion. RHCO says, "BXC is maintaining its growth story despite a tough home-building market. The key element is growing its specialty business faster than the structural segment." BXC over all option implied volatility of 40 is near its 26-week average of 42 according to Track Data, suggesting non-directional risk.

Option volume leaders today are: EnCana Corp. (NYSE: ECA), Apple Inc. (NASDAQ: APPL) and Hewlett-Packard (NYSE: HPQ).

Daily Option Update is provided by Stock Options Specialist Paul Foster of theflyonthewall.com.

Option update 5-17-07: Building suppliers active originally appeared on BloggingStocks on Thu, 17 May 2007 10:51:00 EST. Please see our terms for use of feeds.

Post-Nardelli Home Depot a buying opportunity originally appeared on BloggingStocks on Wed, 16 May 2007 08:55:00 EST. Please see our terms for use of feeds.

This morning's New York Times reports that The General Electric Company's (NYSE: GE) CNBC reporter Maria Bartiromo helped squelch a story by her colleague Charles Gasparino. The story involved the resignation of Todd Thomson from Citigroup, Inc. (NYSE: C).

I've been wondering whether this story had gone dark. But it looks like it just went into the in-depth reporting phase. Now the New York Times has arrived with this bombshell.

What happened is that CNBC's head of news programming, Jonathan Wald, asked Gasparino to investigate Bartiromo's trip on Citigroup's corporate jet with Thomson. Gasparino did so. But when Bartiromo got wind of it -- and specifically the notion that Thomson's job status was threatened -- she complained to Wald. And for some reason, Gasparino did not discuss his reporting on the air. Moreover, some in the network complain that Bartiromo's complaint was the culprit. Wald suggested that the sourcing for the story was not strong enough to air it.

Now the media is starting to analyze her on-air interviews. Some of them, such as the one with former Home Depot (NYSE: HD) CEO Bob Nardelli, were tough. Since she had no business tie to HD, she felt free to "pepper him with sharp questions relating to his conduct and governance." But, as I posted a few weeks ago, her business tie to Citigroup probably led to a much friendlier style when it came to interviewing Thomson in August 2005.

Here's an idea: Why not hold CNBC reporters to the same disclosure standards to which it holds its on-air guests?

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm, He also teaches management at Babson College and edits The Cohan Letter. He owns shares of Citigroup and GE and has no financial interest in Home Depot or The New York Times.

Maria-gate: Did she squelch the news? originally appeared on BloggingStocks on Mon, 12 Feb 2007 11:35:00 EST. Please see our terms for use of feeds.

10 CEO's That Need To Go: 3 Down, 7 Remain originally appeared on BloggingStocks on Thu, 01 Feb 2007 11:15:00 EST. Please see our terms for use of feeds.

Home Depot finalizes $100 million purchase of Chinese retailer originally appeared on BloggingStocks on Wed, 13 Dec 2006 13:47:00 EST. Please see our terms for use of feeds.

This post is written as part of AOL Money & Finance's Best & Worst 2006. Vote for Bob Nardelli or check out the other overpaid CEOs.

Former General Electric Company (NYSE: GE) executive Bob Nardelli lost out to Jeff Immelt in the race to succeed Jack Welch as CEO. And The Home Depot Inc. (NYSE: HD) shareholders would have been better off if Nardelli had repotted himself elsewhere.

Since Nardelli joined Home Depot as CEO in December 2000, HD is down 40% compared to a 120% increase for competitor Lowe's Companies Inc. (NYSE: LOW). In the last five years, Home Depot's revenue grew at a 12.3% compound annual growth rate to $90.1 billion and its net income increased at a 17.7% annual rate to $6.1 billion -- not bad, but a far cry from Lowe's 18.2% revenue growth and 27.8% profit growth during the same period.

And all this inferior performance at Home Depot would not be so bad if Nardelli weren't so egregiously overpaid. He received roughly $30 million in 2005, almost six times the $5.5 million that Robert Niblock, Lowe's CEO, took home in 2005.

Investors in the market for bargain CEOs should stay away from Home Depot.

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm, and a Professor of Management at Babson College. He owns GE stock and has no financial interest in Home Depot or Lowe's.

Best & Worst: Bob Nardelli builds himself a fat pay plan at Home Depot originally appeared on BloggingStocks on Tue, 05 Dec 2006 18:00:00 EST. Please see our terms for use of feeds.