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Re: Corporate stewardship Posted by Bill Homer [Email] (#3427) [Profile/Gallery] (more from Bill Homer) on Wed, 2 Jul 2008 12:04:10 In Reply to: Corporate stewardship, J, Wed, 2 Jul 2008 10:30:07 Members do not see ads below this line. - Help Keep This Site Online - Signup |
Where did it all go: GM has accumulated $20 Billion in cash reserves, but has also been paying out $1/share dividends, which when the stock was at 40 may have seemed reasonable (i.e. 2.5%) - 10% dividend is not reasonable, not prudent, and is probably impossible to do. From the WSJ:
"GM is sitting on $19.8 billion in cash and could tap into roughly another $10 billion in a trust and other credit facilities. And the company's highly profitable financing arm, General Motors Acceptance Corp., has its own cash of $22.7 billion. The financing unit could turn to other sources of financing other than the bond market, such as selling asset-backed securities, something it has done increasingly in the past few years."
On the other hand, Goldman Sachs said on Friday: "Goldman said it expected GM to burn through so much cash this year and next that the company probably would have to raise fresh capital, "which we believe could lead to significant shareholder dilution and/or a cut to the company’s dividend." This is an ugly, ugly scenario for any GM stockholders, which is why they are bailing out lately - further depressing the share price.
The big bump in GM's share price on yesterday's "not as bad as we thought" news was just a bump - it's been more than erased today.
posted by 63.87.52...
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