WDET News
- Merrill Lynch: Bankruptcy "Not Impossible" for GM
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Jul 2, 2008General
General Motors is receiving some bad news from Wall Street.
A report from a top Merrill Lynch auto analyst says the price of stock in the biggest of Detroit’s big three could fall to a new low of $7 a share. The report also says it’s “not impossible” for GM to go bankrupt.
While the company’s first quarter wasn’t great, Paul Eisenstein of the car connection.com says new products were helping GM in the passenger car market and sales of light trucks were holding steady. But, he says with raw materials and fuel costs up… a weak economy, a housing market slump and tighter lending for loans… there are money problems at GM.
“The company is burning through cash far faster than it can generate the money. And it is just in a position where a growing number of industry analysts are wondering whether it can complete the turn around that it needs, this restructuring, before it runs out of money.”
And Eisenstein says it’s not just GM. Chrysler put out a press release last week to fend off rumors of impending bankruptcy… while Ford says it doesn’t foresee making a profit this year or next.
Eisenstein says it’s unknown what the economic effect of one of the US big three going bankrupt would be. But, if such a thing happens, he predicts customers would lose trust in the company at the very least.
Eisenstein says he has never seen the US auto industry this uncertain in his 30 years of covering the business.