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Non-Tech : GM - General Motors -- Ignore unavailable to you. Want to Upgrade?

To: porcupine --''''> who wrote (207)	3/11/1999 1:14:00 AM
From: porcupine --''''>	Read Replies (1) \| Respond to of 543

Deutsche Bank initiates coverage of GM, Ford as buys NEW YORK, March 9 (Reuters) - Deutsche Bank Securities initiated coverage on Tuesday of General Motors Corp.'s and Ford Motor Co.'s stocks with buy ratings. In his initial report, analyst Rod Lache set a six-to-12-month price target of $107 and $72 a share for GM and Ford, respectively. GM closed trading up $0.81 a share at $88.44 on the New York Stock Exchange, while Ford fell $2.31 a share to $57.75. GM and Ford have a lot of upside," Lache told Reuters. "Clearly there's a lot of upside if the market is as strong as we think it will be both this year and next." He expects the U.S. auto industry's light vehicle sales to finish at 15.5 million to 15.6 million, similar to last year and above what many other analysts and automaker expect. Because of that expected strength, Lache said Deutsche Bank predicts strong earnings for both U.S. automakers. He expects Ford's 1999 operating earnings to finish at $5.50 a share and maybe as high as $6.40, compared with a First Call consensus figure of $5.28. GM's should be $9.30 a share with a possible high of $11.50, compared with a First Call consensus of $8.88. [GM closed below 88 today. RR] Lache is bullish on Ford because it derives so much of its success from North America and that region's continued strength will only boost the No. 2 U.S. automaker's shares. He thinks the company's 'Ford 2000' strategy will enable it to increase its product line and market share over the next seven years. Vehicle development costs will continue to decline as Ford has only just begun to derive savings from parts sharing and more efficient sourcing of supplies. Ford also still has room to improve its manufacturing productivity, he said. A new generation of small-car assembly plants, called the "Millennium Project," that use modular assembly are on the drawing boards. Under modular assembly, an automaker has suppliers combine numerous parts into one module that is delivered to the plant's assembly line for faster and more efficient assembly. [This is what GM means by the 4 "Brazil-type" plants it will build in the U.S. (part of their victory in last year's strike), so-named because it is what GM has already done in Brazil, where competitors admit that GM is the most efficient car-maker in the country. RR] A typical 'Millennium' plant will build a car in 10 hours, compared with 34 hours for a typical North American Ford plant today, resulting in savings of as much as $1,100 per vehicle, said Lache, who also expects Ford to spin off its Visteon parts subsidiary within 12 months. GM is a good buy because of the North American market's strength and the world's largest automaker's long-expected turnaround, Lache said. The company has established high internal targets and in a good sign tied executive compensation to achieving those goals. The automaker should improve efficiencies, cut material costs, increase labor productivity and cut warranty costs, Lache said. The latter two improvements should alone result in close to $1 billion of the $4 billion in cost savings expected this year. GM's improved light truck offerings and a possible spinoff of the company's Hughes Satellite subsidiary within the next two years also should help, he said. ((--Detroit Newsroom, 313-870-0200))