Graham and Doddsville -- Value Investing In The New Era Message Board

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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era

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To: porcupine --''''> who wrote (503)	7/15/1998 5:55:00 PM
From: DRM	Read Replies (1) of 1722

A few comments about GM.... European car operations trending down in profit due to overcapacity in Europe and rough compentition. NAO operations much better than 5 years ago but still has large cost penalty compared to Chrysler,Ford,Toyota Delphi operation earnings are being torpedoed because of the strike ... note that the second half of the year has the fewest working days (summer shutdown,dearseason,Thanksgiving,Christmas)and if you didn't get your earnings the first half .... you won't make-em up. GM would LOVE to spin-off 20% of Delphi this year ... but the strike has scuddled that (plus some earnings problems at Delphi ... the numbers just aren't there yet) GMH .... looking good .... owns 70% of SPOT ... doing great GMAC .... doing good (not great) Latin America .... Sales were torpedoed in first half because of huge jump in Brazil (and most of Latin America) in the overnight lending rate.. Recovery not yet in site Far East ... Small GM sales but they were triple whammied with currency devaluations.... Meanwhile GM continues investing heavily in more than a half dozen locations Pension Fund .... fully funded (GM has stopped contributing) due largely to the huge market run-up... Demographics very ugly... In many plants 30%-40% of the workers are eligible to retire in the next 5 years..... New plant startups in North America (Nissan,Toyota etc) have much younger workers ... thus higher productivity, much lower health cost, lower pay scales, and NO pension liabilities fo the next 10 to 20 years. Stock-buy backs ... temporarily suspended during strike ... but will start up again if strike resolved before cash becomes serious issue. Styling .... You be the judge I'm a buyer of GM stock BIG TIME if the stock hits 66 (and I'll nibble at 67 or 68) .... and a seller at 75 ... (I trade this thing in and out of my pension fund) --- a 20 something year employee of GM ----

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