GM & Nissan's Failed Alliance Talks: Wagoner Wins Round 1

This weekend saw the further development of two major business news stories. One culminated this afternoon, but the other will probably run for months, if not years.

On Friday, Jerry York, Kirk Kerkorian's agent on the GM board, announced his resignation from said position. Round one has clearly gone to Wagoner, but I suspect, in the end, that it will be a pyrrhic victory.

Now that York has left GM's board, Kerkorian has withdrawn his offer/plan to raise his stake in the company. Upon learning that, investors sent GM's shares down sharply Friday afternoon.

At this point, many are speculating on Kerkorian's next moves, and the timing thereof. CNBC's official "car guy," Phil Lebeau, preaches that Kerkorian will now sit back and wait, as he and York did with Chrysler.

However, that was then. "Now" is different. I don't think so much of the American auto sector was in such dire straits back then, as it is now. Ford, and even GM, probably don't have as much time as Chrysler did, with guaranteed funding, to regain their health and competitive strength.

My own guess is that Kerkorian, who, in my memory, has not lost money on a major investment since at least 1979, will move to take over the GM board in the spring, and then move quickly. Personally, I think he and York plan to emulate the late, great, J.P. Morgan, and single-handedly restructure the remaining US auto makers into one firm, allied with Nissan/Renault.

One thing Kerkorian and York are not is sentimental. They realize that, regardless of the brand names, Ford and GM essentially still, for a little while longer, have some residual market share and loyalty on which to build. This needs to be cut loose from moronic, myopic management, and inefficient production modes, in order to be served by the better management of Nissan. I think the two takeover veterans have more than just GM in their sights. After they unseat Wagoner, they can approach Ford, regardless of whether it has joined up with Ghosn and Nissan.

I would not bet on this, yet, per se. But neither would I be at all surprised. Ford clearly has to have a partner now. Kerkorian wants Ghosn to manage GM's assets. If all three, or four, with Renault, can play, so much the better. Kerkorian and York understand that scale and depth of talent will be needed to prosper, let alone survive, competing with Toyota in the years ahead.

Friday's events did not surprise me. It just demonstrates how insecure and small-minded Rick Wagoner really is. And how dismissive he is of, and insensitive to, the needs and obligations of his shareholders. These days, that is probably a terminal mistake for a CEO to make, especially on the scale Wagoner has made it.