Deutsche Bank: GM Is Worth Nothing
I've known that General Motors is one of the world's worst-run companies for a while now and I have been bearish on it for a long time. However, I didn't used to think that it would go belly-up. After an initial bout of denial, I finally realized a while ago that The General is definitely doomed without major government intervention.
Today, the auto industry analyst at Deutsche Bank, Rod Lache (who actually is pretty good) agreed. He published a note this morning calling GM a "sell" (no kidding), but here's the great part...his price target for the company is $0. It's refreshing to see an analyst actually say that a terrible company is doomed.
On GM, Lache said that it has few options to save itself other than “external government intervention.” Lache believes that the government will be “compelled to participate” in some sort of loan to GM because without it “it would precipitate systemic risk that would be difficult to overcome for automakers, suppliers, retailers and sectors of the U.S. economy.” A loan however, does not mean that shareholders won't be wiped out.
If I was the government and I was handing out free money to everyone, I would at least require General Motors to fire Rick Wagoner to get the loans that it desperately needs. I realize that he was saddled with terrible labor contracts and that he was in a tough situation, but few CEOs have done a better job at running the company that they are in charge of into the ground than Wagoner has over the past decade. How he has survived is mind-boggling.
Deutsche Bank: GM Is Worth Nothing.