This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Opinion: Lessons from GM's Board of 1992

Yesterday, General Motors announced (that) next year they're gonna begin selling cars in Japan. . . That is good news. And they said today if it works, they may begin trying to sell cars right here in the United States. -- Jay Leno, Dec. 29, 1992

That joke from 16 years ago may make Leno seem like a financial swami, but he was only satirizing the news of the day back then. General Motors, the once-great global maker of cars, had a thoroughly miserable year in 1991 -- losing $4.45 billion -- some $9 billion in today's dollars and was fast increasing the crater in 1992. By the time the year ended, GM had lost another $2.66 billion, excluding a $20.8 billion accounting charge, and in June to September, shed some 27% from its share price.

GM's misfortunes were to change abruptly, however, courtesy of its outside board members. The group -- at first considered lame and lazy by many journalists who followed GM at the time -- not only ousted the CEO and many of his top managers, replacing him with a shrewd executive -- but proved handy with a hatchet in reducing the automaker's costs.

Regardless of how fumbling GM's board of 1992 appeared then -- their dismissal of CEO Robert Stempel was public and cruel -- their missteps can be forgiven because of the outcome. They mandated an overhaul of GM and it worked. By the end of 1993 -- 15 months after Stempel's ouster -- GM's profit had risen to $2.46 billion (roughly $4.8 billion in today's dollars) and its stock price had increased 63% to $43.95 a share.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AZN $69.77 0.00%
GM $37.35 0.00%
JPM $59.54 0.00%
KO $40.35 0.00%
MAR $80.58 0.00%

Markets

DOW 17,678.23 -40.31 -0.23%
S&P 500 2,056.15 -4.90 -0.24%
NASDAQ 4,863.3620 -13.1570 -0.27%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs