Will Politics or Law Govern Upcoming Ruling on GM Creditor Case?

There has been an important story brewing over the past several months regarding General Motors’ flawed bankruptcy process that has been widely ignored by the media. GM may have to readdress its 2009 bankruptcy settlement due to a lawsuit by a group of GM creditors against hedge funds over a settlement involving the company’s Nova Scotia debt. The creditors brought to light the fact that the company did not have its ducks in a row at the time of its 2009 bankruptcy filing and allege that GM was still in the middle of backroom negotiations with hedge funds beyond the deadline. A court decision is now imminent.

Essentially, the dealings should have been finalized and reviewed by presiding judge Robert Gerber but were not properly disclosed. This is no small matter and it is estimated that the cost to GM could be about a billion dollars, which was approximately the … Read More ➡

I’ve Had My Last Cup of Starbucks Coffee

Starbucks coffee cupAt the Starbucks annual meeting on March 20, CEO Howard Schultz told a shareholder named Tom Strobhar to sell his stock if he disagreed with the company’s embrace of gay marriage.

Shareholders do have this prerogative. That is the beauty of securities markets. But the issue is not so simple. Institutional investors now own the majority of shares of publicly-held companies traded on U.S. exchanges. Many people own stock through mutual and pension funds, overseen by professional managers. As a practical matter, lots of Starbucks shareholders do not have the opportunity to easily sell their stock.

But there is a larger issue. Why is one of the world’s biggest and most widely admired companies taking sides on such a controversial issue? If Schultz can tell shareholders who disagree with him to take a hike, doesn’t this necessarily extend to customers, partners and employees? After all, these relationships are voluntary, too.… Read More ➡

Apple’s 100-Percent Renewable Claim Fails the Sunlight Test

green Apple logoApple, Inc. has grown into a widely admired and one of the most valuable companies in the world, producing terrific products that generate long waiting lines every time a new innovation is announced. You would think executive leadership would not feel the need to bow to environmental pressure groups to appear it is eco-friendly.

But apparently acceptance by the likes of Greenpeace, and a warm reception at Silicon Valley liberals’ cocktail parties, still ranks high in importance in the corner offices in Cupertino, Calif. – even though their boastful claims aren’t true.

The latest example surrounds Apple’s absurd assertion that its electricity-sucking data centers, which support services like cloud computing and iTunes, are powered completely by renewable energy. Why the Mac-makers would brag about a phony achievement that is so easily debunked makes you wonder how smart they really are.

“Our goal is to power every facility at Apple … Read More ➡

What Twinkies Can Teach Us About GM

TwinkiesBin Laden is dead and Twinkies are alive! That might have been the rallying cry if we were in an election year and if the Bakers Union was deemed as important as the UAW to the parties seeking reelection. But the Obama Administration is not as dependent on smaller unions, like the Bakers Union, for contributions and votes. That fact allowed the Hostess bankruptcy to proceed in an unimpeded manner in which such processes were designed to.

It was recently reported that the Hostess bankruptcy would not lead to the end for brands like Twinkies, Wonder Bread, and a bunch of others. The initial filing brought speculation that Twinkies would disappear forever as panic set in for junk food enthusiasts and lead to boxes of the iconic brand being hoarded by many. The outcome can give us some insight into how the General Motors bailout could have been handled … Read More ➡

Will GM Buy Back Ally Financial on the Cheap?

GM Ally logosI recently wrote about how government-owned Ally Financial was the only big bank that failed the Federal Reserve’s stress test and how that ties in to General Motors’ operations. The bailed-out bank formerly known as GMAC received about $17 billion of taxpayer money as part of the auto bailout (aka bankruptcy) process. It is now possible for GM, which relies on the auto lending unit of Ally Financial, to buy back the best segment of the bank on the cheap after taking advantage of the taxpayer largesse that saved the lender.

The Obama Administration has received criticism for its lack of vision for Ally as Treasury has given no indication that it would end the government’s intrusion into the private sector by selling its Ally stake. Since GM sold off most of its Ally / GMAC holdings (which was required for Ally to get a taxpayer handout) and the government … Read More ➡

Bailed-Out Ally Financial Only Bank to Fail Stress Test

GM Ally logosThe Federal Reserve’s latest round of stress tests for the banking industry showed only one bank remaining on a shaky financial foundation. That bank was government-owned Ally Financial (the bailed-out company formerly known as GMAC), which also happens to be General Motors’ prime source for financing.

GM divested itself of GMAC so that the struggling lender could be classified as a bank holding company and receive billions of taxpayer dollars. In a move to distance itself from GM, the company was renamed Ally Financial. The government maintains majority ownership of Ally Financial, which in turn has helped GM by financing retail sales and dealership inventories.

GM is the only major automaker without its own captive financing arm. Bailed-out Chrysler recently cut the umbilical cord which maintained the flow of taxpayer-funded financial assistance from government-owned Ally by reaching a deal with Spain’s Banco Santander so that it could have in-house lending … Read More ➡

Save Billions by Ending Electric Vehicle Subsidies for Wealthy

Akerson and VoltIf the White House and Congress are looking for a place to cut, how about ending the $7,500 electric vehicle (EV) tax credit for those making over $200,000 a year?

The Congressional Budget Office recently reported that federal EV subsidies will cost taxpayers about $7.5 billion over the next few years. The majority of those buying costly “green” vehicles, like General Motors’ Chevy Volt, are making far more money than the average American. Why should those that can afford to buy these green toys get reimbursed $7,500 each as the nation is going broke?

Does anyone really think that the dismal electric car sales will get that much worse if we remove the handouts? I believe most of the ideological and rich folks who buy a $40,000 Volt, much less a $100,000 Tesla or Fisker, would have bought the car even without the subsidies. Isn’t it time to transition … Read More ➡

Tesla CEO Elon Musk Fights Perceptions as Stock Drops

Elon MuskTaxpayer-supported Tesla, recipient of a $465 million stimulus loan guarantee to produce yet another electric toy car (the Model S) for rich people, reported its 4th quarter earnings last week. The word from billionaire CEO Elon Musk (Flickr photo: Jurvetson) was, “we’ll do better next quarter – promise.”

That’s a paraphrase, but nonetheless Tesla’s announcement fell short of most Wall Street analysts’ expectations. The company lost $90 million for the quarter as it ramped up production to fill pre-orders, paying workers to put in an average of 68 hours per week in December. On Thursday the company suffered the biggest one-day drop in its stock price – tumbling nearly 10 percent – in more than a year. Shares fell to $35.16 before recovering slightly on Friday, but were at $34.38 for Tuesday morning’s opening.

Unlike its counterpart Fisker, Musk and Tesla have enjoyed comparatively better … Read More ➡

GM Recovery in Reverse as Earnings Disappoint

Akerson photoGeneral Motors released its disappointing earnings report last week to the sound of crickets. While financial TV news networks (along with most analysts and journalists) ignored the negative aspects of the release, share price has fallen over 5% in less than a week since the news hit. The earnings release and subsequent SEC 10K (annual report) expose the fact that GM’s recovery is not the success that the Obama Administration and media portray. The lack of the fanfare that typically comes with GM earnings releases is as good an indication of the meaning behind the numbers as is the decline in share price.

The most glaring red flag in the latest financial reporting by GM is the unusually high amount of one-time adjustments to earnings. I previously reported that GM would have had about a $30 billion loss for the year if it did not rely on a $35 billion Read More ➡

Boeing Woes Balloon as Battery Fix Remains a Mystery

Boeing 787 DreamlinerWould you be willing to fly on a newly developed jumbo airliner with battery technology that has been known to cause fires, whose exact cause is still unknown, but whose manufacturer has claimed to find a temporary “fix” that would allegedly contain –but not prevent – future flaming flights?

Boeing bets you would. Airbus bets you wouldn’t.

On Sunday the Seattle Times reported that Boeing might propose a plan as early as this week to get the troubled Dreamliner airborne again, after two incidents involving fires with the jet’s sizable lithium ion battery packs shut down all 50 of the units now in service. The rumored remedy doesn’t appear to be an actual repair of the volatile battery itself, but instead “includes a heavy-duty titanium or steel containment box around the battery cells” and high-pressure tubes to vent dangerous gases outside the fuselage in case of what engineers call “thermal … Read More ➡