It's official. Associated Press is reporting that GM's auditors (the number crunchers) have released their report on the health of GM and it's not good.
"The corporation's recurring losses from operations, stockholders' deficit, and inability to generate sufficient cash flow to meet its obligations and sustain its operations raise substantial doubt about its ability to continue as a going concern," Deloitte & Touche LLP's auditors wrote in their report.
GM's stock promptly took an 18% dive, taking its $1.84 down to within pennies of Ford's own dismal $1.82. Folks, what we have is trouble in River City and no one's singing in the rain.
It's turnaround plan includes laying off some 47,000 workers by the end of 2009 and getting billions more in bailout loan money, dumping unprofitable brands, restructuring debt and getting both creditor and union concessions.
GM readily admits that filing bankruptcy, even a chapter 11 "restructuring" kind, would likely scare off consumers who would doubt that the company would be around long enough to honor warranty claims. In the Rv industry, companies like Alfa Leisure and Country Coach have taught those lessons.
Will GM last in its present form? Probably not is our prediction. Will it mirror the breakup of ATT into all the "baby Bells" of decades ago, with each make becoming its own independent company? Could be. Do you want to buy some GM stock while it's cheap? Probably not.
If you're a consumer with a GM car or truck and you've got defects, now's the time to get it in the shop, while the dealer is still getting warranty claims paid for. When that stops, your dealer is likely to stop working on defects for free too.
You can watch the news report on GM's auditor report by clicking here, if you can stand it. It's time to watch your dollars very, very carefully, folks.
Burdge Law Office
Helping Consumers Protect Themselves Since 1978.