Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: porcupine --''''> who wrote (470)	7/6/1998 5:26:00 PM
From: porcupine --''''>	Read Replies (1) \| Respond to of 1722

[Wayne: This one is in your bailiwick. The following is feedback from a GADR reader. I'm not sure which of my comments it does not "support": that GM has not been "full cycle" profitable, or that free market forces will inevitably make it so. It's bottom line appears to be that GM is currently worth $553, which would certainly support my view that GM is "Value Heaven". My problem (and Graham's) with this kind of analysis is that it projects both earnings growth rates and average interest rates 30 years into the future. Because of exponential compounding, a slight variation in these assumptions will produce a very wide divergence in result. For example, a discount rate of 5.5% annually may turn out to be low, if the monetary spigot is turned off. And, 8% annual earnings growth might be safely predictable for chewing gum or soda pop (although I am skeptical even of this). But, it certainly seems like a brave assumption to project that the demand for a big-ticket item like a car or truck will grow at a rate much faster than global GDP is likely to grow. Your analysis is always welcome. Reader letter follows:] My research doesn't support Russell's comments. Chrysler Ford GM Daimler Toyota Price $43.38 $63.50 $70.50 $95.19 $51.63 Price/Earnings 10.74 11.3 8.94 25.73 24.01 Book Value/Shr $17.52 $25.04 $37.00 $31.00 $24.30 Earnings/Share $4.04 $5.62 $7.89 $3.70 $2.15 ROE 24.7% 23.1% 27.9% 12.0% 0.0% Price/Bk Value 2.48 2.54 1.91 3.07 2.12 Debt/Equity 2.1 7 8.3 1.8 0 Frcst Earnings $5.00 $5.29 $8.06 $5.01 $1.64 Forecast Growth 8.3 8% 8% 17% 7% Current sales vs. Avg. -15.0% -24.5% -20.7% -24.4% -23.9% Current productivity vs. Avg. 6.1% -124.0% -20.9% 740.5% 462.3% Cash flow per share $10.50 $12.18 $33.60 $11.25 $4.20 Cash flow NPV@5.5%, 30 Yr. $120.45 $142.12 $553.48 $258.33 $38.18

To: porcupine --''''> who wrote (470)	7/7/1998 11:21:00 AM
From: porcupine --''''>	Read Replies (2) \| Respond to of 1722

Report: GM needs to slash 50,000 jobs to become competitive July 7, 1998: 8:37 a.m. ET NEW YORK (CNNfn) - Already crippled by two United Auto Workers strikes, General Motors Corp. reportedly may have to cut more than 50,000 hourly jobs in the United States to become as competitive as its rivals. Citing sources close to GM (GM), Tuesday's Wall Street Journal said the automaker will have to cut an additional 22 percent of its hourly workforce of 224,000, even though it already has eliminated 64,000 jobs since 1992. GM has invested billions of dollars in the past five years on new equipment and redesigned vehicles that require fewer labor hours. The Journal said company officials now feel they need to get a return on that investment, particularly in the face of a reinvigorated Ford Motor Co. and the Daimler-Chrysler Corp. merger. The Journal said GM proposes to eliminate jobs as workers quit or retire. GM's job-cutting plans are a major source of conflict between UAW and GM officials as they negotiate strike settlements at two Flint, Mich., plants, which have now entered their second month. The walkouts have idled about 163,000 non-striking hourly workers and have cost GM about $1.2 billion in the second quarter. GM and UAW officials met for negotiations until late Monday amid signs that both sides are eager to end the strikes. There has been speculation GM and the union may agree to settle the strikes before July 13, when the auto maker's annual two-week holiday for model changeover ends. Neither side, however, has indicated it is willing to give in on key issues. About 3,400 workers represented by UAW Local 659 walked off their jobs June 5 at GM's metal-stamping plant in Flint in a dispute over work rules and productivity. They were joined six days later by 5,800 peers from UAW Local 651 at the nearby Delphi East diversified parts plant. Union workers at the metal-stamping facility, the Flint Metal Center, accuse GM of reneging on pledges to invest $300 million in plant upgrades and of attempting to slash jobs or move them out of the country.