GM’s "going concern"
U.S. car makers are in free fall.
I can’t find anyone who knows the industry and thinks Chrysler will – or even should – survive. Ford just revealed its biggest drop in sales in the company’s history. The New York Times reports Ford finished 2008 with $24 billion in cash reserves, but $25.8 billion in debt.
Today, we hear that financial auditors at General Motors don’t see much of a future for the company.
“Our recurring losses from operations, stockholders’ deficit and inability to generate sufficient cash flow to meet our obligations and sustain our operations raise substantial doubt about our ability to continue as a going concern,” the company said in the filing [out today].
This sounds bad, but it could be pro forma. This blurb fits the mold of a corporate statement called the “going concern” letter. Other struggling companies use this type of language to force unions and suppliers to make concessions.
And even after GM auditors say there’s “substantial doubt” about the car maker’s future, other corporate executives said today that they’re confident the company can restructure and become viable once again.
But, the road to recovery mapped out by GM is paved with a taxpayer bailout. A growing number of Americans say they don’t want any more money going to mismanaged companies – and GM is a poster child for this category.
The latest proof of incompetence is releasing today’s auditor analysis. This is something that may have worked 10 years ago, maybe even five years ago. But now?
A recent Gallup poll found nearly 75 percent of Americans oppose giving GM any more bailout money. Which means taxpayers are calling the company’s bluff.
So, GM’s future may come down to just two questions:
1) Who stands before Congress and the American people – in this economy – and says, “Y’know that $13 billion we borrowed from you a couple months ago? Well, funny thing, but we need $14 billion more – or we’ll go bankrupt.”
2) Why would anyone give this person – this company – a dime?
Tags: economy
