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.

[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.

[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."

[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]

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...

[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.

[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.

[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.

[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.

[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

[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!