GM Stock Crashes To 1970's-Era Prices

Weak Performance Expectations For U.S. Automakers Take Toll On Industry Suppliers As Well

(AP)  Shares of General Motors Corp. plunged to their lowest price in more than 30 years, and Ford shares hit another 52-week low Thursday as analysts continued to speculate about just how bad things will get for U.S.-based automakers.

In midday trading, GM shares dropped $1.36, or 10.6 percent, to $11.44, after tumbling as low as $11.21 earlier in the session.

The last time the Detroit-based automaker's shares dropped below the $12 mark was on Jan. 2, 1975 when they fell to $11.68, according to the University of Chicago's Center for Research in Security Prices.

Ford shares hit a 52-week low of $4.94 in early trading before recovering to $5 by midday, down 24 cents, or 4.6 percent. They have traded as high as $9.70 over the past year.

GM's drop came after a Goldman Sachs analyst cut his rating to "Sell" from "Neutral" and his price target to $11 from $19, saying things could still get worse for the North American automotive industry as a whole.

"We expect GM shares to continue to underperform as market fundamentals deteriorate which exacerbates liquidity concerns," the investment bank's Patrick Archambault wrote in a note to investors.

"We think GM's automotive cash flow burn this year and next is likely to lead it to look to raise capital, which we believe could lead to significant shareholder dilution and/or a cut to the company's dividend."

"We believe 2Q 08 earnings will likely be weak on the back of prolonged shutdowns at GM and a 22 percent reduction in truck production at Ford," he wrote. "And we believe several companies could revise guidance in the face a perfect storm of volume cuts and commodity cost pressures."

GM shares had traded as high as $43.20 over the past year.

Archambault also cut his ratings for Lear Corp. to "Sell" from "Neutral" and for Tenneco to "Neutral" from "Buy." Both auto suppliers also set 52-week lows Thursday.

Lear dropped $2.84, or 15.6 percent, to $15.27, easily passing its previous low mark of $16.98. Tenneco shares fell $1.15, or 7.1 percent, to $15.09 after falling as low as $14.89, moving past their previous low of $15.92.

The drops went along with the rest of the market. Major indexes showed losses of more than 1 percent, including the Dow Jones industrial average, which shed more than 200 points and dropped to its lowest level of the year.

[singingrick]

It sure was smart of GM to lobby Congress to keep fuel efficiency standards low while the Japanese automakers worked to raise theirs.

[faith_in_w]

singingrick, yes we can blame those corrupt liberals for todays woes.

[pensacola88]

Free market economy is a little "Too Free" and causes entire fuel and auto industries to struggle.

The free-market doesn''t respond to calls for drastic changes until the equilibreum is moved over drastically.

If we make fuel efficient cars, then gas prices go down and people start wanting bigger cars again, which returns us back to the original problem.

If we make ethanol fuels, the gas prices go down as more consumers demand ethanol, and people start wanting pure gasoline and bigger cars again, - to the original problem.

If we make more people use mass transit, less demand drives down gas prices, - to the original problem.

The most profitable car is the single or two seater. It is small. Most vehicles are occupied with only a driver. Discouraging 4-seaters, trucks, vans, and converting the hiways to be filled with multitudes of smaller vehicles will make roads safer, private transportation more affordable, and return automakers to profitability.

The government can legislate two types of gasoline stations with two different selling prices: A small filling station where only smaller cars can fit in the lanes will pay the cheaper prices; and the regular station where larger vehicles pay the higher gasoline prices.

[neo267-2009]

Detroit spent the late 70s and all of the 80s destroying the American public''s perception of their cars - squeaking by only with trucks and, later, SUVs. They are reaping what they have sown. Too bad the CEOs from that time period retired rich.

[Syndicate]

Buy Ford. Why? Because when they hit $4.90 three and a half months ago it rapidly recovered to $8.80 about a month ago. Now its back down. Ford at $5.00 share is an awesome buy even with all the uncertainty. I think you will see a shift in sells from SUVs to Focus''. I sure see a lot of 2009 Focus on the road. I own about a thousand shares I think I''ll have to get more.

[a8151947]

This is not news. No one should even worry about a company that is as bad as GM. The sooner they are broke and the union is gone the better. Buy a real car, one that is NOT made by a US company.

[u-r-right]

I can remember when the mid-seventies begat the downturn in American car quality. They ignored the mechanical and cosmetic problems through the mid nineties. Now, it seems too late for them to recover even though there has been strides in reliability and build quality. You can blame the unions for sucking them dry. But it was the upper level that turned a blind eye and ear to what kind of product they were putting out. Now they are behind the curve on decent hybrid technology and alternative fuel technology. This may just be their last, dying gasp.

[mcv57]

Posted by cbscrash07

You sound like a brain-dead bargain hunter. If you study the organization, its failure is more probable. Why? READ! They have neither financing nor the resources to update from gasslers to alternative energy efficient vehicles. With its corrupt and bigot executives, the KKK has more of a chance to rally. Next to Dodge, they cannot hope to recover the Greater Depression.

[noloyalisti]

Could not have happened to a more deserving right wing war profiteering corporation. Unfortunately the people that suffer are the workers and the people who worked or invested with these incompetents.

We the people own and should run this country. When should we take our country back? Boycotts and general strikes needed before it is too late!!!!

[incog-nito]

Don''t worry about GM people. This is just the free market in action. Rest assured, though, that if GM gets into seriously deep trouble, they will most certainly go to Congress to ask the American taxpayer to bail them out. The free-marketeers love to talk endlessly about the "invisible hand" of the free market, but will turn into downright socialists when it comes to their self-interest.

[brianbwb-2009]

"The free-marketeers love to talk endlessly about the "invisible hand" of the free market, but will turn into downright socialists when it comes to their self-interest." Posted by incog-nito

Also those who decry public assistance as "welfare" will be more than happy to commit their taxes to "corporate welfare".

The "needy" corporations always love to hold a knife to the necks of the workers as a threat to get their welfare checks, and other regulatory consessions.

Then after they get what they want, they lay off the workers anyway, while keeping their mega-buck salaries.

Neocons in action.

[brianbwb-2009]

"You can blame the unions for sucking them dry." Posted by u-r-right

You can also credit the umions for the fact that is you are an employee, you are paid enough for your labor to be able to afford the computer you are using, without the unions America would have long ago reverted to a slave labor nation, and your worst nightmare, communism, would have gained a very strong base, if not the entire government.

[shanev137]

GM''s drop came after a Goldman Sachs analyst cut his rating to "Sell" from "Neutral" and his price target to $11 from $19, saying things could still get worse for the North American automotive industry as a whole.

-------------

.....while Goldman Sachs along with Morgan-Stanley were the one''s who exploited the Enron loophole and drove oil prices to the moon during the last few years.

Hilarious.

Americans are so stupid....this whole country deserves to collapse from the inside out.

[u-r-right]

You can also credit the umions for the fact that is you are an employee, you are paid enough for your labor to be able to afford the computer you are using, without the unions America would have long ago reverted to a slave labor nation, and your worst nightmare, communism, would have gained a very strong base, if not the entire government.


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Posted by brianbwb at 12:44 AM : Jun 27, 2008

I agree that unions played an important role to protect and help workers years ago but the modern unions, post 1970''s, became corrupt and greedy.

[tootall10142]

I HOPE THET GO UNDER FOR THE V-8 SCHEME THEY PUT ON THE THE AMERICAN PEOPLE AND EVERY ONE WHO BOUGHT IN TO THEM.THE AUTO WORKERS HAVE BEEN PAID TOO *** MUCH IN THE YEARS PAST AND NOW THE FAT LADY IS SINGING AND SO IS MY HEART.SCREW THEM LET THEM EAT CRACKERS THERE NOT SO BAD I HAVE PLENTY OF RECIPES. ZOOM ZOOM ZOOM!

[sandykent32]

Ford and GM wouldn''t be in this position had they made good cars within the last thirty years. I''m sick of my Chevy''s falling apart 6 months after I buy them. Invest in Nissan. www.theoandavirus.com

[drivelphobe]

Both Ford and GM offer great investment potential. These are great companies and will prosper in the near future as they develop the more fuel efficient products. They are both under tremendous pressure and that is the good news. Nothing creates results like fear.

[godseyesore-2009]

Not. They are getting what they deserve. US autos suck.
So they are finally going to give us energy efficient vehicles...in 2012. Thanks a lot, GM. That really helps. US competitiveness? What a joke.
Buy Toyota, Honda, or Nissan. They will last and they will be energy efficient.

[incog-nito]

I agree that unions played an important role to protect and help workers years ago but the modern unions, post 1970''''s, became corrupt and greedy.

Posted by u-r-right at 07:13 AM : Jun 27, 2008

And the modern corporation has evolved into benevolent entities that always have workers'' best interest in mind? Riiight! Naivete is a charming trait... in children.

The fact is that there is potential for greed and corruption in ANY organization. But unions were and are needed to counterbalance corporate abuses and excesses. Or people can go back to 16 hour days and child labor. Wait, they''re doing that in China right now, and that''s where U.S. jobs are going.

[lochlan-2009]

Hey GM, bet you''re glad you dismantled all those EV-1''s. Good business decission, better pay that CEO another $8.5million for the year. A 1,560 week low.
Good work.

[txgrouch2006]

GM vehicles are the worst. I owned one, couldn''t get rid of it fast enough. Designed with lethal defects, and THEY DON''T CARE, design defects aren''t covered by the warrantee.

GM is one reason WHY manufacturing is leaving the country...

[allister200]

its real nice to know that all thses people writing comments feel that foreign cars are so great. way to put your own kind out of buisness.. no wonder why there arnt anymore good UNION jobs left in this country .. all over seas... wat a discrace....if everything is so great about foreign junk then move to china and strave like the rest of the communists

[txgrouch2006]

allister200 wrote
put your own kind out of buisness
-------------------
I''m all for "buy USA."

But I''m not willing to put my life in danger to do it. GO TO WORK FOR A COMPANY THAT DOESN''T MAKE PRODUCTS WITH LETHAL DEFECTS.

The story I got from the Chevy dealer when I took mine in for repair was "We won''t fix that. It''s a KNOWN PROBLEM."

[fiberglass3]

I''m surprisd Chrysler hasn''t developed a hybrid or electric vehicle yet. Afterall we (USA) bailed them out back in the 1980''s.

We need engineering skills now. Super Capicators are being developed in Texas, Canada and China.