Oh, and by the numbers, here is how the business performed. Looking strictly from a corporate health POV (not just form an investor POV), looking at their operating margins, the key number in showing the profitability (or the bottomless pit of a business), we see the figures as follows (quarterly, annual 2007, annual TTM; negative numbers in red, positive numbers in green):
Evidently, by the numbers - and the one of the most important ones to look at - GM and Ford are not a good business (the same can be interpreted by Chrysler) - bail them out in 2003, they struggle, bail them out in 2008, they'll struggle again, they'll need another bailout in 2012, 2016, 2020, 2024, 2028, 2032, 2036, 2040, 2044, 2048, 2052 and well... remember when the iron curtain fell in Russia, and what we found were a bunch of lazy workers in an inefficient system? Hello US automakers.
Lets look more into Ford as a business (not a stock, but as a business):
Profitability Ratios:
Operating Margin TTIM: -8.75%
5 year Operating Margin: -2.48%
Net Profit Margin TTM: -6.92%
5 year Net Profit Margin: -1.01%
Management Effectiveness:
Return on Assets TTM: -4.3%
5 year Return on Assets: -0.59%
Return on Investment TTM: -6.47%
5 year Return on Investment: -0.83%
GM? Even worse.
Operating Margin TTM: -10.21%
5 year Operating Margin: -2.48%
Net Profit Margin TTM: -14.01%
5 year Net Profit Margin: -5.51%
Return on Assets TTM: -17.85%
5 year Return on Assets: -2.86%
Return on Investment TTM: -39.35%
5 year Return on Investment: -4.17%
Now, tell me again why this bailout will work? Looking at the income statements, there is nothing about these businesses that shows it can survive once its billion dollar allowence is up, and they need their allowence again in 4 years.
__________________
"With a coach and a player, sometimes there's just so much respect there that it's boils over"
-Taylor Hall
Last edited by Phanuthier; 11-19-2008 at 02:33 AM.
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Oh, and by the numbers, here is how the business performed. Looking strictly from a corporate health POV (not just form an investor POV), looking at their operating margins, the key number in showing the profitability (or the bottomless pit of a business), we see the figures as follows (quarterly, annual 2007, annual TTM; negative numbers in red, positive numbers in green):
Evidently, by the numbers - and the one of the most important ones to look at - GM and Ford are not a good business (the same can be interpreted by Chrysler) - bail them out in 2003, they struggle, bail them out in 2008, they'll struggle again, they'll need another bailout in 2012, 2016, 2020, 2024, 2028, 2032, 2036, 2040, 2044, 2048, 2052 and well... remember when the iron curtain fell in Russia, and what we found were a bunch of lazy workers in an inefficient system? Hello US automakers.
Lets look more into Ford as a business (not a stock, but as a business):
Profitability Ratios:
Operating Margin TTIM: -8.75%
5 year Operating Margin: -2.48%
Net Profit Margin TTM: -6.92%
5 year Net Profit Margin: -1.01%
Management Effectiveness:
Return on Assets TTM: -4.3%
5 year Return on Assets: -0.59%
Return on Investment TTM: -6.47%
5 year Return on Investment: -0.83%
GM? Even worse.
Operating Margin TTM: -10.21%
5 year Operating Margin: -2.48%
Net Profit Margin TTM: -14.01%
5 year Net Profit Margin: -5.51%
Return on Assets TTM: -17.85%
5 year Return on Assets: -2.86%
Return on Investment TTM: -39.35%
5 year Return on Investment: -4.17%
Now, tell me again why this bailout will work? Looking at the income statements, there is nothing about these businesses that shows it can survive once its billion dollar allowence is up, and they need their allowence again in 4 years.
Well it would take alot of time going through the income statements and balance sheets, and while it would help the numbers, the US automakers still likely wouldn't be seen as a profitable business and likely would not be able to reach the type of profitability and management ratios that Toyota, Honda, Nissan et al reach. While Ford has some newer production facilities with newer technology in areas of lower operating expenses (cough... China), I believe GM and Chrystler are still using shops from the 60's and my guess is it would take a pretty large injection of capital just to get GM and Chrystler (and how much of Ford?) up to par.
As I said, when you look at Ford, GM and Chrystler, I think there has to be some separation between looking at it as a stock and looking at it as a business. Those making the decision have to look at the longativity of the big 3 and ask if this is a type of business that can survive 20 years or 100 years on their own 2 legs. And what do you look for when you look at the health of a business? In almost every single aspect, the big 3 fail.
__________________
"With a coach and a player, sometimes there's just so much respect there that it's boils over"
-Taylor Hall
BTW ... good to know the execs of the big 3 flew to Washington on a private jet to ask for a corporate bailout
Haha I saw that on CNN, pure stupidity. The guys from Pennsylvania and California were just leaning into them for that. I love the comparison he said, "It's like a man walking into a soup kitchen wearing a top hat and tuxedo".
Haha I saw that on CNN, pure stupidity. The guys from Pennsylvania and California were just leaning into them for that. I love the comparison he said, "It's like a man walking into a soup kitchen wearing a top hat and tuxedo".
Yeah, they got a royal roasting for that. One of the state senators asked "Are any of you going to turn in your private jet tickets for a one-way commercial airpline ticket? Please raise your hand." (None of the big 3 execs raised their hand)
SS: "Let the records show that none of the executives have raised their hands and will be flying home from this bailout request on a private jet"
pwned
You thought AIG was corrupted, these guys are are the slim bags of the business world that are taking your tax dollars as huge welfare to sponsor their splurges and luxuries.
__________________
"With a coach and a player, sometimes there's just so much respect there that it's boils over"
-Taylor Hall
Not bailing the auto industry out will certainly be painful, but in the end, much less painful then shelling out Billions of dollars every year to them, and having them still complain that they can't compete.
Not bailing the auto industry out will certainly be painful, but in the end, much less painful then shelling out Billions of dollars every year to them, and having them still complain that they can't compete.
Well beyond that - where there is failure comes opportunity.
__________________
"With a coach and a player, sometimes there's just so much respect there that it's boils over"
-Taylor Hall
Actually the factory has been bought by another company. Saw this on BBC last night and for the life of me I cannot remember which one. It could be Italian but I am unsure. The factory isn't automated so they have closed it to "refurbish" it. It will reopen and will be producing cheaper cars again in 2 years or so.
You know, all this talk about the jobs being lost and whatnot - maybe I'm missing something here, but if there's no bailout, can't/won't companies like Toyota and Ford just acquire portions of GM, Chrystler and Ford super cheap (ala JPM buying WaMu; BoA buying ML, super cheap) as well as their facilities? Rather then have their fixed assets sitting around doing nothing, they'll probably get sold to another car company to use, and with that, skilled labour will be acquired as well. (It might require a government loan - I wonder what happened to that $700B anyways?) Sure the $30 per hour floor sweepers will be out of a job, but skill workers will probably should be able to find jobs in the new environment, no? Plus, under new management (Toyota, Honda, et al) those UAW contracts get replaced by new ones that are, lets say... a little more capatalist.
Or if the feds don't want all of them in the tank, maybe save one, consolidate what you can of the big 3 into 1, and sell the rest of the assets to the overseas car manufacturers. Ford seems to have assets that they are selling to raise capital, maybe they'll survive. Buh-bye, GM - good riddance.
Last night on NHK all Japanese manufacturers have announce they are layoff workers due to slumping sales. So I would assume they are not exactly in the position to be buyers. Maybe...
The big 3 made their money. The foreign market capitalized on sloppiness. Before the foreign automakers broke into the north american market, the big three were making money on parts, not cars. Why do you think that a foreign vehicle lasts longer? The mentality was "sell a vehicle for cheap, we'll sell parts later at markup". The foreign makers saw that and said "we'll build a vehicle that'll cost more, but won't need as many repairs and parts". With todays world, we have no time to deal with shops, dealerships and vehicle downtime.
I own a chevy cobalt '06, I am 18 by the way, but I wouldn't mind seeing any of them disappear. I love my Cobalt, but it has a lot of flaws, like the 150ish HP (if that), out of a 2.2L engine, come on now. It has spunk though so I don't complain. My next vehicle will be European, they look better, built better, everything is better, except they cost more $. But then again, they actually make a profit every year, why would that be? Oh, because they make good cars people want to buy. I know that it has more to do with GM's terrible decisions to keep making huge stupid trucks, and having the Pontiac G5, look the EXACT same as my Cobalt, etc., and just starting to make vehicles "fuel efficient".
I own a chevy cobalt '06, I am 18 by the way, but I wouldn't mind seeing any of them disappear. I love my Cobalt, but it has a lot of flaws, like the 150ish HP (if that), out of a 2.2L engine, come on now. It has spunk though so I don't complain. My next vehicle will be European, they look better, built better, everything is better, except they cost more $. But then again, they actually make a profit every year, why would that be? Oh, because they make good cars people want to buy. I know that it has more to do with GM's terrible decisions to keep making huge stupid trucks, and having the Pontiac G5, look the EXACT same as my Cobalt, etc., and just starting to make vehicles "fuel efficient".
I own a chevy cobalt '06, I am 18 by the way, but I wouldn't mind seeing any of them disappear. I love my Cobalt, but it has a lot of flaws, like the 150ish HP (if that), out of a 2.2L engine, come on now. It has spunk though so I don't complain. My next vehicle will be European, they look better, built better, everything is better, except they cost more $. But then again, they actually make a profit every year, why would that be? Oh, because they make good cars people want to buy. I know that it has more to do with GM's terrible decisions to keep making huge stupid trucks, and having the Pontiac G5, look the EXACT same as my Cobalt, etc., and just starting to make vehicles "fuel efficient".
Here's the rub though, could you even get a decent european vehicle for the same money? 150hp out of a 2.2 isnt that terrible, if you want 100hp/liter you're going to pay for it. The only hondas ect getting that are the "R" models.
