GM and Chrysler’s Decisions in the Face of Failure

December 29, 2008

Microsoft clients of Onsite Computer Services in New Orleans are abuzz with talk about the value of their retirement portfolios in light of 2008’s dismal stock market performance. Yesterday Onsite Computer talked with a client who inherited a significant amount of General Motorsand Chrysler common stock upon the death of his father in 2000.

The question Onsite pondered is the real share value of General Motors and Chrysler common stock given the terms of the government bailout. There is a stipulation in the bailout that in the event of liquidation the US Treasury is repaid BEFORE common stock holders.  At present, many allege GM and Chrysler stock are worthless .

Mercedes Benz, who owns a portion of Chrysler with Cerberus, has written-off their balance sheet the value of their shares in Chrysler. Essentially, Mercedes Benz doesn’t hold much hope that Chrysler can revise its flawed business model into profitable business plan by April of 2009.

Some contend GM and Chrysler face two main choices: bankruptcy or develop a new profitable business model to convince Washington for more bailout funds in the spring. Many allege that after almost 100 years of dysfunctional management decisions, every stakeholder in the US automobile industry faces tough decisions.

One group of stakeholders facing tough choices in any ‘New’ business model is union labor. It will be interesting to see the extent of union concessions in the face of a potential GM and Chrysler bankruptcy. One thing is certain – the far-reaching ripple effects of either bankruptcy or restructuring will certainly affect many. What do you think? Should taxpayers bailout another business for past management imprudence, or should we allow the Darwinian process inherent in true, free-market capitalism to work its ‘magic?’

If you’re searching for New Orleans computer service or repair of your Microsoft based system or network, then call the Microsoft specialists at 504-469-6991. Onsite Computer Services, Inc. in New Orleans

You may also be interested in Onsite Computer’s Blog.

This New Orleans On-Site Computer Service post was provided by Eli Lucas. Eli can be reached at Onsite Computer serves the Microsoft computing needs of small businesses throughout the Greater New Orleans area including Uptown, Lakeview, Broadmoor, Mid-City, Metairie, Jefferson, Kenner, Westbank, French Quarter, and the Warehouse District. Please visit our website for New Orleans Computer Service


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