The Five Dumbest Things on Wall Street This Week
|Crash and Burn
But more cash on hand
1. Skid RowThe milestones are just flying by at General Motors (GM).
On Thursday, the giant automaker posted its sixth straight quarterly loss. The Detroit company lost $323 million for its first quarter, including a $946 million deficit in its staggering North American operations.
Yet the quarter was widely hailed as a success, as GM lost less money than it did a year ago. The company also added to its cash position as the threat of a strike at supplier Delphi looms despite recent progress there. GM stock, which had lost half its value over the last year, rose 10% Thursday on evidence of at least modest progress.
"The first quarter represented an important milestone in GM and GM North America's turnaround," said CEO Rick Wagoner. "Not only did we see significant improvement in the financial results of all our automotive units, we also announced numerous additional actions to improve our North American competitiveness and liquidity."
Of course, milestone achievements are nothing new at GM. Just two weeks ago the company agreed to sell a controlling stake in its only consistently profitable business, the GMAC lending arm, to investors led by Cerberus capital.
"This agreement is another important milestone in the turnaround of General Motors," Wagoner said April 3 in announcing that pact. Just in case you didn't get the point, presiding director George Fisher added two paragraphs later in the same release, "This transaction along with the other progress GM has been making on its turnaround plan, is an important milestone."
Yes, though the company continues to lose market share and struggle financially, milestones are zipping by with great regularity. Even 2005, when GM took a stomach-churning $10 billion loss, was a milestone year, to listen to Wagoner.
"We achieved a number of important milestones in 2005," he said of the company's Asia Pacific unit in January's fourth-quarter earnings release. "For the first time in our history, we sold more than 1 million vehicles in Asia Pacific, increasing our market share there to 5.8%. And importantly, in China, now the second-largest market behind the United States, GM became the leading foreign brand."Yes, good work. Now if GM could only persuade more investors that it's not headed for one final milestone: a Chapter 11 bankruptcy filing. Dumb-o-Meter score: 91. "We think bankruptcy is really a bad idea," Wagoner told CNBC Thursday morning. "The answer is to put more results up like we did this quarter." To view Colin Barr's video take on PortalPlayer's entry in Five Dumbest this week, click here.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV