Buh-bye, GM

This story makes the case for ditching General Motors from the Dow Jones Industrial Average given its poor performance lately (the stock’s at a 33-year low). GM’s market cap — the value of the firm, arrived by by the markets by multiplying the number of shares by the share price — is down to a paltry $7.5 billion (lower than Ford, which is about $11.9 billion). GM’s sales will be about $179 billion this year, but they just don’t make money on all that income, which hurts the stock.

For the sake of comparison, non-Dow member company Apple Computer has a market cap of about 20 times that (about $153 billion, with revenues of $40 billion and, you know, persistent profits out the wazoo). Cisco has similar numbers.

5 thoughts on “Buh-bye, GM

  1. well you really made the case that GM is a buy. 30 year low. And Apple is a sell. Though I am holding the aapl as I am a believer. A week ago you were blowing up the electric car that they were putting out? What happened?

  2. Hey, I’d love it if an American car company could actually make an interesting car, like the Volt. I’m rooting for them in that. But even a huge success there can’t turn GM into a vibrant company. They need serious organizational change. Anyway, the point here is that old-line manufacturing is no longer the segment of the US economy that drives the nation, and DJIA should probably reflect that.

    I think some gain-taking is probably in order for AAPL, but I wouldn’t put any money in GM that I wasn’t prepared to lose.

  3. gm need to follow apple model. design it here and build it overseas. Seeems to be working for all of their competitors. Seems we can no longer afford tobuild things here because the standard of living is too high and we are a nation of consumers brutally extracting the best value form the market. GM has made some cool cars over the years, unfortunately cool does not mean profitable. Pontiacs, I think are interesting cars in both function and design. I like Lutz, his Blue Devil Corvette is badder than any production car in existence and for a paltry 100k will outrun, handle, and outsteer ANY german car made. It will be out next year with the ZR-1 badge. Has twinscrews (superchargers integrated with each other)you can see through the Poly-carbonate window in the hood. Too bad that is not the kind of car that makes billions. Loan me a 100k so I can buy one??

  4. Overseas assembly works much better for things smaller than breadboxes than it does for cars, I’ll wager, but point taken.

    Cool can mean profitable (again, Apple), but GM has done a poor job of both in general.

    GM is moribund and broken, but so is Ford, and so is Mopar. They’re going to do very, very poorly in the $5/gallon gas world because they keep doing stupid things even in the midst of getting some things right. Example: Apparently, to run the A/C in the Ford Escape hybrid, you have to run the gas engine. Imagine how well that’s going to work in the Southern half of the US.

  5. well you should note that the US car makers are innovators. Minivan, SUV really their doing. Not that I particularly like either, though I did really enjoy my time in the 2 door Tahoe… Still, the parts is the key, in terms of offshore manufacture. Mopar will begin putting the bluetec motors into their heavier cars from their former partners Mercedes Benz. I think this will be successful as the torque curve favors bigger cars. I can attest to the performance and mileage in the bluetecs. Averaging 31 mpg and i drive 100 MPH on the tollway at least twice a week. US has a mandate for hi efficiency motors with markers in 2013 and 2022 taking fuel efficiency from avg 22 mpg to 33 to 44. GM has some advantage in the v6 motors so I would not count them out just yet. I would expect them to build parts elsewhere which is a problem for them and the “made in America” branding. One last thing, the largest growing segment for the Japanese has been full sized pickup trucks. Currently, US has a big advantage on fuel efficiency for light duty trucks. I really don’t understand why ford won’t throw and extra 20K onthe Mark VI and go after the Germans?? Now about that loan…