GM’s failure to match Ford’s profits makes investors doubt about firm’s power

Article by Christian Andrei, on June 7, 2011

General Motors Co.’s Chief Executive Officer Dan Akerson has yet to show investors that the company has the operating efficiency or future product plan that will match the profits of Ford Motor Co., which made 36 percent more money during the first three months of this year, excluding one-time items. This is what Akerson had to say at GM’s first annual meeting since back to being public.

Since its initial public offering of the company in November, the company has been trading 13 percent below its $33 price.

Anticipation around the IPO has brought the company and its biggest investor, U.S. Treasury, to expand the sale to $15.8 billion in common equity plus preferred stock. Since the IPO, the company has tumbled and investors are awaiting a plan that will match Ford's profit or even buy out the government's share, analyst Peter Nesvold at Jefferies & Co. stated.

The analyst further said that the company has managed to keep the business together and brought it far, but the investors have yet to really believe that it is “a new GM.”

The company’s executives have talked about buying stocks from the Treasury, the people familiar with the scenario have disclosed.

Average estimates of ten analysts that Bloomberg has surveyed revealed that the company may earn adjusted net income of $7.72 billion this 2011. Based on the estimates, profit on an adjusted basis in 2012 may increase to $9.55 billion.

Topics: gm

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