In an unexpected move today GM CEO Rick Wagoner announced that the company is exiting the North American market. "We are profitable the world over and expanding market share except in our home country. We are embracing globalization, not running away from it. We see value for shareholders by seeking a Chrysler style sale on our North American assets and spinning that company off from GM. Stockhlders will then have our strong brands in North America as well as a globally positioned firm that is expanding in the hottest markets of India and China."
Wall Street, not to mention Detroit, was rocked with this news. Already hedge funds are said to be eyeing cash brands like Chevy, others are considering auction prices for the rest of GMAC. GM shares jumped 15% in pre market trading as analysts saw increased shareholder value in the two new firms. "Stripping off GM NA will finally send a message to the remaining 74,000 UAW workers that this is Alamo time for them," noted an auto analyst familiar with the story. Goldman Sachs is rumord to be in talks with Ford over a similar proposition. "Handing the keys to GM headquarters in Detroit to the UAW is not out of the question," quipped one analyst.
Okay just kidding, but was I? GM announced its continuned lack of earnings report today. Read the story, really. How could one discern this minefield of accounting information without studying accounting ? While everyone assumes things change gradually they do not. Witness the sale of Chrysler, and Mercedes paying the buyers to take it. Gradualism will not likely change the fortunes of Ford and GM. As the market cap of GM and Ford have fallen below companies like say JCP or WAG, one has to wonder if this is not a realistic possibility. A new buyer could take the firm into Chapter 7 bankruptcy, and get new contracts much more to their liking.
Professor Elam 
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