York on GM: "The Wherewithal to Fix Itself"

The real news for General Motors (GM/NYSE) shareholders coming out of Jerome York's speech yesterday wasn't the stuff being played up by the media. My scanning of headlines and wire stories focused on the proposed dividend cut, and the need for GM to get into "crisis mode."

For me, it was York emphatically declaring that GM shouldn't file bankruptcy, terming it the "worst alternative" and saying it would be "very ugly." He further explained that "GM has a mountain of liquidity on hand -- both cash and non-core assets -- that can be sold. So it has the wherewithal to fix itself."

Kirk Kerkorian ain't going away. I don't know if the statements of York -- his advisor on GM -- are a warning shot to GM management to pick up the pace or the initial steps in a march to declare war on the company. Or, as some suspect, are actually a help to Rick Wagoner in the company's negotiations with the UAW.

Yet it's important to note that Kerkorian hasn't continued selling GM stock. York said Kerkorian's Tracinda Corp. would consider buying the 12 million shares it sold for tax purposes at the end of 2005, plus consider buying another 12 million shares under the right circumstances.

Of course, talk is cheap.

But Kerkorian now owns 7.8% of GM and is the company's third-largest shareholder. So he's got enough at stake to care.

Let's see what happens between now and GM's annual meeting. The deadline for proposing one or more directors is February 6.

P.S. Regular readers know that Kerkorian was never my reason for investing in GM. In fact, I posted buying the company's shares here BEFORE the news of Kerkorian's stock purchases became public. I have stated several times that I like his involvement because it "shakes things up."

Sounds like the shaking has just begun.

Comments

[Alex Postallian]

Mr. York is on the money of sharing the pain,from top to bottom. But the big problem is,its not going to happen,the psuedo executives are to greedy to give up a sou, they rather see the co. go down the drink.Barron and other so-called experts are wrong. greedy is the name you give the G.M.s mgt. not Kirkorian

[John]

Alex,

I agree the pain has to be shared up and down and across the organization. I'm not as hard on Rick Wagoner as many. Turning around GM is like trying to turn a huge supertanker on a dime. It can't be done.

But, like I keep saying with GM, time will tell. Thanks for reading.