GM's Christmas Present: A Return to Normal

NEW YORK (TheStreet) -- General Motors  (GM) has received the best Christmas present it could ask for: an end to the government bailout and a smooth transition of power to a GM lifer.

The federal government announced on Monday that it has sold its remaining stake in the company, taking a $10 billion loss on the deal, although one think tank estimates the bailout saved 1.2 million jobs and preserved $34.9 billion in tax revenue in 2009 and 2010.

GM's shares closed trading Tuesday at $40.40. It has a market cap of $56 billion, and with $115 billion in revenue for the first three quarters, it may top last year's $152.2 billion.

GM generated $3.9 billion in cash flow from operations in the third quarter and had $20.4 billion in cash as of Sept. 30. The turnaround is not complete, as The Deal reports, but the company is well on its way.

This year, GM stock traded in tandem with that of Ford  (F) until the middle of November, when it bounced off resistance and rose 10% for the month while Ford fell 2%. GM shares are up 42% for the year and its sales for November were up 19% from a year earlier. 

Many reporters are commenting that incoming CEO Mary Barra is female. What they should be commenting on is that she has spent her entire life with the company. Barra's father was a die maker for 39 years and she grew up in Pontiac, Mich.

At 51, she has done all the traditional jobs on the way to this one, finishing most recently as vice president of product development, a common stepping stone on the way to the top job. Her Stanford MBA was earned as a company employee.

Barra came to the company at age 18, entering what was then the General Motors Institute for training as an engineer. Her path to the top was also traditional, including a stint as a plant manager. The one nod to her gender her predecessor, Dan Akerson, made was that he felt her appointment was "like watching your daughter graduate from college."

If there is a hallmark of Barra's career so far, it lies in flattening the organization and reducing the company's myriad rules. Asked once about dress codes, she remembered telling a manager "dress appropriately" and expected him to know what that meant.

Mark Reuss, who was Barra's chief competitor for CEO, will get her old job at product development. It will be a tough act to follow. The latest Chevrolet Impala drew strong reviews, and the Cadillac ATS was 2013 Motor Trend "Car of the Year." J.D. Power says GM car quality has been rising steadily.

Barra also has the chance to become wealthy in her new job, because the end of government ownership means that the company is again free to make pay its executives what it wants. It's also free to pay a dividend again, and analysts expect one. A quarterly dividend of 25 cents a share, or $1 a year, would cost $1.39 billion.

But the dividend will have to compete with some unfinished business, including $3.9 billion in preferred stock held for union retiree medical benefits, along with stakes held by Canada and the province of Ontario, which also helped with the bailout to save jobs there.

Another challenge for Barra will be the traditional one of succeeding in the market. Her big hits at product development were big cars, and GM will remain under pressure to meet U.S. fuel economy standards, which need to reach 54.5 miles per gallon by the 2025 model year. Our Anton Wahlman notes, however, that GM had its all-electric Volt in 2007, and is ahead of Tesla in that area. 

That will be tough with GM's current product mix, and is certain to generate many news stories over the next few years. But those stories will be another sign that normal times have returned.

At the time of publication the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

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