GM Failing At Both Ends Now

Yesterday's Wall Street Journal contained an article regarding GM's latest problems. To add gloom, the inept Chairman of the firm, Rick Wagoner, made a pathetic appearance on CNBC this morning to reinforce his total lack of grasp of his company's near-fatal situation.

Yesterday's headline was "GM to Cut 5,000 White-Collar Jobs by Nov. 1."

From my proprietary research on large-cap equities, I can tell you that a continually-shrinking firm- both in employees and assets- has little chance of earning consistently superior total returns for its shareholders.

So GM is continuing on the road to, at best, mediocrity, if it survives the next few years at all.

To add to its woes, GM is now following Chrysler and Ford in trimming the availability of leases in the US. This will hit vehicles such as trucks and SUVs, whose after-market values are now falling, due to their low gas mileage performances in the face of high oil and gasoline prices.

Thus, GM is taking it on both ends. It's cutting production capacity, while also cutting the availability of resources to facilitate sales in the manner which have propped up its revenues for the past decade or so.

The nearby Yahoo-sourced price chart for the past six months for GM and the S&P500 Index confirms that the company, under Wagoner's bumbling, is in freefall. Chapter 11 is probably a viable, realistic alternative before too long. GM has lost 60% of its market value in just the past 6 months.

And now they are tying one marketing arm behind their back by curtailing financing programs for leasing vehicles, after having spent years teaching their customers not to 'buy' GM products anymore, but lease them.

Smart, Rick. Really smart.

Now you've extended your mismanagement to the sales end of the business, way beyond inept oversight and leadership of design, manufacture and financing.