Lehman Cuts GM Price Target amid Revamp Talks
Lehman Brothers reduced its estimates for General Motors, cutting the share price target to $19.50 from $24, citing a fall in sales of pickup trucks and SUVs as well as a doubling of steel costs among headwinds facing the car maker.
Meanwhile, General Motors's top managers are working on additional restructuring measures to deal with a declining U.S. auto market and an accelerated shift from trucks to more fuel efficient vehicles, a person familiar with the plan told The Associated Press late Wednesday.
The person, who requested anonymity because the plan is still being devised, would not give details of what is under discussion by Chairman and Chief Executive Officer Rick Wagoner and his top managers.
The restructuring, which follows thousands of job cuts over the past three years mainly through buyout and early retirement offers, is to be announced at the company's annual meeting in Wilmington, Del., on June 3, The Wall Street Journal reported Wednesday night.
GM spokesman Tom Wilkinson said he could not comment.
The new steps likely will involve further cost cuts including reduced truck and sport utility vehicle production and a faster rollout of more car and crossover models, similar to what Ford Motor announced last week. Already this week GM announced it would speed up the elimination of one shift each at its Flint and Pontiac pickup truck factories.
Ford on Wednesday confirmed that it is looking at involuntary layoffs of salaried employees, perhaps costing as many as 2,000 workers their jobs.
The Journal quoted GM Director George Fisher as saying that the company must take further steps.
"Obviously these times dictate more actions, and Rick and the team are about doing that," Fisher said in an interview with the newspaper. "Rick and the team are looking at what things can be done and will be done."
GM shares on Tuesday dropped as low as $16.87, their lowest level in nearly 26 years. The automaker's stock closed Wednesday at $17.15, down 27 cents, or 1.6 percent.
The company also has just emerged from a spate of labor problems, with two local union strikes at key factories and a nearly three-month strike at key parts maker American Axle and Manufacturing Holdings.
GM said in a regulatory filing last week that the strikes will cost it a total of $2 billion before taxes in the second quarter.
Fisher told the Journal that GM's board fully supports the company's management team.