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News Update

Ed Whitacre becomes the new Chairman of GM. Interestingly he was CEO of SW  Bell that acquired ATT and a total of $285 B of companies along the way.  While he does not know the car industry he does not Washington DC which at the moment is a lot more important. And he is from Texas. 

Six Flags Theme Parks filed for Chapter 11 bankruptcy this last week. Read the article and contrast what is happening here with what happened at GM.  Here the lenders take over, at GM the workers and the govt took over, gee sounds like the Red Russians to me. By the way this means the symbol SIX has changed to SIXF.OB. What?

New York Stock Exchange NYSE ompanies have one to three letters, such as C, ED, or FDX. Overthe counter or NASD firms have four like MSFT.  SIX was delisted from the NYSE when it took Chapter 11. Ob refers to a bulletin board stock. Such companies used to have their share price available on the National Association of Security Dealers NASD bulletin board, one had to call a NASD dealer to get   quote. Now they are available electronically but not from the NYSE. NYSE has financial requirements for listing and staying listed, 

 GM and Citicorp C both got booted out of the Dow Jones Industrial Index. Travelers and  CISCO were substituted. 



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18 responses to “News Update”

  1. Adam Dupnik Avatar
    Adam Dupnik

    They were talking on the radio about that this morning. Even though six flags has been in financial trouble, they added new rides and did some renovations over the break. I am assuming they will stay open, imagine if they closed boy would that be an big economic hit to San Antonio, with the tourists that come.

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  2. Tina C Avatar
    Tina C

    The news has been reporting that Six Flags will remain open. While the closure of the SA location would have an impact on employment,especially summer jobs, and some impact on tourism, a lot of the tourism in SA is related to the conventions SA hosts. That’s not to say it won’t affect tourism but maybe not as much as losing some of the bigger conventions.
    Wonder what impact it would have on Sea World’s business… Do you think it would increase it or cause it to decline?

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  3. Dennis Elam Avatar
    Dennis Elam

    I am sure that closing parks is the last thing Six maangement or the creditors want, I don’t think it would affect Sea World, if one is coming to SA I suspect one would come anyway.
    No lack of things to do

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  4. Dennis Elam Avatar
    Dennis Elam

    AS I said in class this morning at this time GM is more of a jobs program than a car company, Whitacre’s experience in working with the govt will serve him well here, perhaps it can look forward to becoming a car company again.
    DLE

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  5. Dennis Elam Avatar
    Dennis Elam

    we are putting in a example comment.

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  6. LeAnna M Nesbitt Avatar
    LeAnna M Nesbitt

    The bank code has levels of priority of claims in bankruptcy courts. Bond holders are ranked above equity holders. They should be paid back if its a successfull Ch. 11 and not a total and complete liquidation. With GM, that was a deal that dealt with a pre-packaged negotiation developed with the treasury and federal reserve in an attempt to maintain a variable manufacturing company and industry. For that matter that would otherwise create possible caucus in the Nations dealers, manufacturers, etc. Therefore GM represents a potential economic failure and thats why there was a request for the federal government to become a major stock holder and equity owner during and after the filing of the case and eventually emerging from bankruptcy. As a result its not in compliance that GM is in compliance with bankruptcy status. Since their allowing the federal government to become owners with an adverse effect directed at the creditors that would normally have a priority status. The difference adhere to the code simply and directly with out federal intervention where as the GM case is basically a pre filing negotiation case that allows that some of the bond holders really experience substantial investment losses as compared to the situation at Six Flags. If the government had not intervened then GM would have had to file CH.7 which would create a liquidation.

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  7. Dennis Elam Avatar
    Dennis Elam

    It is conceivable the lenders ie bondholders would have made a very different deal. The BK code would have them owning the company not the UAW. It is hard to imagine the govt and UAW doing anything but continuing overly generous employment contracts, at least until the 2012 elections. Overturning BK law is indeed going to make anyone cautious about being in a situation where they are indeed at risk, now no one knows the rules.

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  8. Tammy Salinas Avatar
    Tammy Salinas

    I think this is a case of living beyond their means. Once comfortable with your situation most people tend to just let things go. Just 3 weeks ago my husband was adding 35 NEW FLAT SCREEN TV’s from 36 in. to 42 in. to SIX FLAGS here in San Antonio. Now all of a sudden they are filing for bankruptcy. Makes me think what else have they invested in poorly? I doubt those 35 flat screens are what entices people to attend the park.

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  9. Dennis Elam Avatar
    Dennis Elam

    Tammy
    Great post! Indeed Six Flags is awash in too much debt no doubt from poor acquisitions, the sellers must be laughing at a resort somewhre now rather like the guys that sold Chrysler to Mercedes. Indeed what does attract someone to the park, do they know, I wonder? This is what managerial accounting is all about.
    Strategy, core values, value chain, devoted customers

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  10. Trevor Avatar
    Trevor

    you know for some reason this just doesn’t suprize me! That park has been going down hill for years you can see it from just go inside the place the!

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  11. Sylvia Amison Avatar
    Sylvia Amison

    I don’t think management at Six Flags is aware of what keeps customers coming back. Just this year at the opening of the park for the 2009 season I spoke to several patrons and agreed with their concerns. Prices are getting higher and discounts and perks we receive for being a season pass member are decreasing. The advantage Six Flags had over Sea World for my bunch are the rides. The more rides the better. Sea World does not offer the same type of discounts and perks as Six Flags. During my visits to Six Flags this season I have seen some of the flat screen tv’s Tammy mentioned, and I have not found them once to be worth the money spent. In order to avoid closure Six Flags needs to focus on keeping their regular season pass holders and attracting new customers, and not worry so much about unnecessary things.

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  12. Dennis Elam Avatar
    Dennis Elam

    Sylvia gives us a good example of the customer point of view
    is there a real value chain there from her perspective, it seems to be declining
    again this is the sort of thing managerial acct is all about
    thanks Sylvia

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  13. Richard Delgado Jr. Avatar
    Richard Delgado Jr.

    I was surprised the Six Flags took so long to file. There had been rumors that Fiesta Texas was going to be sold to a local buyers. I wonder what happened to that idea, seems that would be an ideal solution to keep Fiesta Texas open. I have season passes and an email was sent out stating that nothing was going to change and the doors are staying open. I really don’t think Fiesta Texas will ever close, if it comes to that point a local buyer will be found. I agree with Sylvia, if they would spend money on paint for example it would make HUGE difference. I also notices the Six Flags Network they installed and in my opinion was a waste of money.

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  14. Tammy Salinas Avatar
    Tammy Salinas

    The managerial accounting in six flags has failed. I too went to Fiesta Texas to see building not even open, looking run down, as Richard stated, “needing at least some paint” and the old laser rooms closed up with boards. Could it be that their core values were looked into elsewhere? I think so. Just like a neighborhood who would not like their block to have a chipping house with boards on it with no tenants would look to that house with an eyesore, so as did I. I felt like Fiesta Texas was not worth my money if parts of the park were not up and running. I switched to Sea World.

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  15. Dennis Elam Avatar
    Dennis Elam

    You will recall from intermediate accounting that maintenance of assets is a mangement function, failure to do so in a business with such public exposure can be deadly as noted in these posts on the blog.
    As we say in mgt accounting, people do not complain, they switch, here is the proof of that!

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  16. Bill Long Avatar
    Bill Long

    The comment in the original article about Ed Whitacre not knowing the automotive industry but he does know Washington scares the living hell out of me.
    It never ceases to amaze me how ignorant Corporate America is when choosing the new CEO of a company. I want someone to helm an industry that started as a blue collar worker and rose thru the ranks. I mean, you wouldn’t take a first year teacher and make them the President of Texas A&M and why? Because they have no frame of reference in which to work through the complex problems they’ll face.
    Past experience doesn’t mean crap if you came from an outside industry. If you don’t believe me research a man named Al Dunlap. He turned Scott Paper Products around and made a fortune but tried to do the same thing with Sunbeam and crashed harder than a junkie who’s connection skipped town with the product. The point being even though I’m sure Ed Whitacre was a good man for a telecom company those same ideas won’t work in the automotive manufacturing industry because they are two different dynamics.

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  17. Dennis Elam Avatar
    Dennis Elam

    Another good post! Those were my thoughts initially when I read the article but….at the present time GM is more a federal jobs program, think depression era WPA than a car company. I read that Barney Frank was successful in telling GM not to close a facility in his district. Obama believes GM should build small green cars though they have never been successful in that area, they build light trucks and SUVS. So GM will have to do what the govt tells them to do strategy is out the window. Ford is now forced to compete with a firm that has the full faith credit and printing press of the US govt. So GM can continue to make the same mistakes, building cars in union shop states while Ford works on building world cars and making realistic deals with the UAW. Now that the UAW is on the GM Board, realism is out the window.
    Funny you should mention Dunlap who is featured in the textbook, he actually wrecked sunbeam by just plain fraud, building ending inventories, forcing firms to take inventory and not charging for it, ie, as you say, doing everything except building an appliance company.
    The only car guy at GM was from Chrysler and is in his 70s, Henderson and Waggoner were finance guys. Ferrari, Caroll Shelby Harley Earl, car guys…it makes a difference. The CTS V and the Vette are the only great cars GM makes though I am reading good things about the supercharged cobalt..

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  18. Rick Avatar
    Rick

    Will this effect the people with season tickets?

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