Thursday, July 13, 2006

Stop the Presses: Goshn & GM

Yesterday's Wall Street Journal carried a very illuminating piece on Carlos Goshn, Renault, and the potential alliance between Renault, Nissan and GM. This is Kirk Kerkorian's hopeful gambit to exit his considerable position in GM stock at a profit.

What the Journal pointed out, however, is that, while Goshn did turn around Nissan, as he promised, he hasn't yet succeeded with Renault. After 18 months of work, according to the article, Renault is still valued at zero, awaiting Goshn's magic touch. The other pieces of the alliance allegedly comprise the value of the outstanding stock, indicating that investors are awaiting Renault's rehabilitation.

What this means, as the article pointed out, is that GM & Kerkorian may have to wait in line for quite a while for this alliance to develop. Or to show results, if it does develop.

Maybe Rick Wagoner doesn't have much to worry about from Goshn & Co. just yet. And maybe I was premature in suggesting, earlier this week, that my prediction of one less CEO in Detroit is nearing reality faster than I had expected.

Still, it's not good news for GM's shareholders. I think the suggestion of the alliance simply puts GM in the "intensive care" unit for the forseeable future. And as I've written before, I would not look to the prior and current management team to fix what they messed up, on such a large scale, to begin with. My guess is that this new revelation about Goshn's capacity to help GM means the latter will likely be foundering a while longer.

In any case, it highlights a potential pitfall in GM's path out of its misery. And its shareholders are by no means out of the woods yet, by a long shot.

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