BloggingStocks

Bankruptcy for one of the Big Three?

Melly Alazraki — 2008-07-03T15:19:00+00:00

Filed under: Industry, Ford Motor (F), General Motors (GM), Toyota Motor Corp. (TM)

I was actually in Detroit on Monday. I'm not going to write about the urban decay and the deterioration of the city. Many have researched and documented this far better than I ever could. But even in my short three-hour visit, the evidence was all too clear. Personally, I think Detroit has more character than many other richer and far more maintained and manicured cities. Even abandoned and in shambles, many of the buildings are architectural gems. Perhaps because one can still see the glorious past through the ruins, that it is so affecting. Or, as the website names them, they are The Fabulous Ruins of Detroit.

It is for this reason that the recent talk of bankruptcy for one of the Big Three has been so disturbing.

This week has been very busy for automakers, starting with June car and truck sales reported on Tuesday. General Motors Corporation (NYSE: GM) reported an 18.2% drop in sales, which was actually better than expected, and Ford Motor Company (NYSE: F) a drop of 27.9%. Meanwhile, Japan's Toyota Motor Corporation (NYSE: TM) posted a 21.4% sales decline. GM shares actually got a boost from the sales figures, but that didn't last long.

On Wednesday, Merrill Lynch downgraded GM shares to Underperform from Buy and warned that the company was burning through cash faster than investors realize. Merrill said in a note that "Bankruptcy is not impossible if the market continues to deteriorate and significant incremental capital is not raised." According to Merrill, GM will need to raise $15 billion in capital to fund its operations for the next two years. This caused the stock to drop below $10, to levels not seen since 1954! Meanwhile, Ford shares are trading well below $5, also a multi-decade low.

Today, Thursday, GM and Ford stocks are rebounding over 3.1% to $10.29 and over 3.9% to $4.53, with slightly more than hour of trading left. But today JPMorgan wrote that automakers could face liquidity issues. While the overall picture painted by JPMorgan looks more bleak, the two analysts there say GM and Ford actually have options. GM could, for example, secure some of its more profitable international operations to issue debt. Ford could sell Volvo and its Mazda stake if it needs to raise cash. Chrysler could sell its Jeep, minivan or Ram franchises. These aren't such great options, and Ford definitely fares better on that department, but options nonetheless. Meanwhile, their restructuring efforts are gaining steam with only today Bloomberg reporting that GM may sell new mini-cars to U.S. buyers. Let's hope such measures aren't too late.

There almost seems no way to escape a bankruptcy of one of the Big Three, and as much as I've been on automakers' cases for a while now for not reading the market right and not seeing what many have plainly seen, I still hope they could find a way to rebound from this situation somehow. Bankruptcy of such a big company will affect the local economy even more. And bloggers really don't need to have more ruined building to add to their Flickr photostream.

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Automakers brace for more hard times to come

Michael Fowlkes — 2008-07-02T15:20:00+00:00

Filed under: Bad news, Products and services, Consumer experience, Competitive strategy, Ford Motor (F), General Motors (GM), Toyota Motor Corp. (TM), Oil

It probably should come as no surprise, but June was a tough month for automakers, and all signs are pointing to more troubles out on the horizon.

All but one major automaker saw their sales drop last month, with Honda Motor (NYSE: HMC) being the sole exception. For the month, Honda actually had a 1% year-over-year sales growth, which given the current market place was an exceptional feat.

So just how bad was June for the automakers? Pretty bad. During the month, combined auto sales fell to 1.19 million vehicles sold, a 266,000 decline from the same period last year. This just continues the trend that we have been seeing all year, amounting to roughly a 10% sales decline during the first half of the year.

Consumers are definitely reacting to the record high gasoline prices, moving as far away from SUVs as possible. In the wake of the shift, the major automakers found that they were unable to keep up with demand for the smaller, more fuel efficient cars. Typically you would think Japanese automaker Toyota (NYSE: TM) would have flourished under these circumstances, but it too suffered sales declines, mainly a result of not being able to keep up with demand for their its cars, in particular its fuel-efficient Prius, Corolla and Yaris cars.

General Motors (NYSE: GM) was able to put up better total sales than Toyota, by selling 262,000 during the month, edging out its Japanese rival by about 69,000 vehicles. But this was mainly accomplished by offering last minute no-interest financing to bring buyers onto its lots. GM was able to keep the #1 slot for for the month, which does not cancel out the fact that it had a 21% drop in its car sales and a 16% decline in its truck sales.

America's other major automaker, Ford Motor (NYSE: F) also felt the pain last month. During the month, Ford's sales shrunk by a mind-boggling 28%. The company is scrambling to shift its focus away from its heavy-duty trucks and SUVs, but the transition is just not coming fast enough. Ford, as well as GM -- which have both announced that new, smaller cars are in the pipeline -- will continue to face pressure since in both companies' case the new subcompacts are not expected to roll off the production floor for at least another couple of years.

So yet another disappointing month for auto sales, and with gasoline prices continuing to remain at record levels, most analysts agree that the hard times are here to stay, at least for a while.

Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the online investment advisory service Investor's Observer.

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Brand name stocks under $10 to beware of, market themes for 2008's second half - Today in Money 7/2

Allan Halprin — 2008-07-02T08:59:00+00:00

Filed under: Microsoft (MSFT), Yahoo! (YHOO), Starbucks (SBUX), Ford Motor (F), General Motors (GM), Motorola (MOT), Toyota Motor Corp. (TM), Netflix, Inc. (NFLX), Citigroup Inc. (C), Sprint Nextel Corp (S), Blockbuster Inc 'A' (BBI), Money and Finance Today, Bank of America (BAC), Circuit City Stores (CC), Palm Inc (PALM), UAL Corp (UAUA), Crocs Inc (CROX), Qwest Communications Intl (Q), Rite Aid Corp (RAD)

In the News:

· Car Sales Hit 10-Year Low as June Was Bleak Month; GM Dropped 18%, Toyota 21%

· Microsoft May Take Another Stab at Yahoo

· Starbucks to Close 600 Stores

· Blockbuster Ends Pursuit of Circuit City

· Bank of America Closes Countrywide Acquisition; More Misery Ahead for BofA?

· Citibank ATM Breach Reveals PIN Security Problems

· Deepening Cycle of Job Loss Seen Lasting Well Into 2009

· Netflix Stars in a Slow Economy

· Manhattan Real Estate Finally Starts to Soften

Brand-Name Stocks Uner $10: Buyer Beware
These well-known names in the bargain bin may look appealing, but experts advise laying off until their earnings picture is clear. Among the stocks to be weary of are Sprint Nextel, Motorola, Ford Motor, Qwest, Washington Mutual, Northwest Airlines, Del Monte, Rite Aid, Chico's, Crocs, United Airlines, Palm, Sealy, Blockbuster, Circuit City and Orbitz.
Brand-Name Stocks Under $10: Buyer Beware

How to Play the Market in the Second Half of 2008
Market pro Todd Harrison discusses the top 10 themes for the rest of the year.
Where we are and where we're going: 10 market themes - MarketWatch

Finding Safety in a Bear Market
Here are five ways to protect your portfolio.
Keeping Your Balance in a Scary Market - Kiplinger.com

Airports Cash in on Flight Delays
Your delayed flight is bad news for you and your airline, but it's money in the bank for the airports who are turning into multi-billion dollar shopping malls for stranded passengers.
Delayed flights mean big money for airport industry - CNNmoney

Meet the New King of Brand Names
The CEO of Fortune 500 newcomer Jarden Corp. is busy reviving old brands, but Wall Street has its doubts. Meet Martin Franklin who is snapping up undernourished brands and give them a shot in the arm. His company now markets more than 100 brands - among them Sunbeam, Oster, Rawlings, K2, Hoyle, Mr. Coffee, Crock Pot, and First Alert - and is the market leader in such retail categories as kitchen electronics, playing cards, tents, and grill-gas canisters.
The new king of brand names - FORTUNE

How to Protect Yourself If a Store Goes Bankrupt
When furniture seller Levitz closed last fall, its Web site informed customers that they might not receive ordered merchandise, that there would be no more returns or exchanges, and that some paid-for extended warranties would not be provided. With tough times forcing Levitz and other retailers-including Sharper Image, Linens 'n Things, and Lillian Vernon-to file for bankruptcy protection, it's wise for shoppers to take precautions. Here's how.
ConsumerReports.org - Protect yourself if a store goes bankrupt

How American is American Apparel?
CEO Dov Charney has Canadian passport, extraordinary business acumen and social grace of a subway flasher.
Minyanville - NEWS & VIEWS-How American is American Apparel?

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The next Toyota is Ford

Georges Yared — 2008-06-27T15:00:00+00:00

Filed under: Forecasts, Consumer experience, Competitive strategy, Ford Motor (F), General Motors (GM), Toyota Motor Corp. (TM), Boeing Co (BA)

This post is part of my series featuring established companies and the smaller, more aggressive or innovative rivals that may eventually succeed them.

This may be perhaps the most surprising article in this series as few investors realize how huge Toyota Motors (NYSE: TM) is, especially when compared to Ford Motors (NYSE: F). Toyota sports a stock market valuation of $168 billion, 12 times the size of Ford's market cap of $13 billion. In fact, an even more surprising statistic: Toyota is 8 times larger than Ford and General Motors (NYSE: GM) combined!

Toyota has recently surpassed GM in annual unit sales of cars and trucks. Toyota sold over 9.3 million units in 2007 and has 16% market share in the United States. In spite of the difficult environment that all auto makers are facing with the economic slowdown, Toyota is poised for future growth with its cutting-edge line-up of hybrid autos and trucks. But, not too far behind Toyota is Ford. The company has perhaps a much brighter future than its main U.S. competitor GM. Ford has taken the necessary steps these past 21 months under the leadership of CEO Alan Mullaly. He was the president and CEO of Boeing's (NYSE: BA) commercial plane division.

Mullaly brings experience to Ford, but more importantly, he has a fresh approach and ideas from the aerospace industry. He has quickly retooled Ford by closing unproductive plants and expanding manufacturing in expense-friendly nations such as Mexico. Mullaly embraced hybrid technology and has positioned Ford as the American hybrid alternative to Toyota.

The auto industry is suffering terribly these days and this is reflected in the current market valuations of all the publicly traded auto makers. Ford's stock is at $5.80, a full $4 down from its 52-week high. Recently, Kirk Kerkorian's Tracinda Corp. made a sizable investment in Ford, paying $8.50 per share. Tracinda owns more than 5% of Ford's outstanding shares.

Ford, under Mullaly's leadership, is determined to weather the economic storm. The company has improved its line-up of product offerings with hybrids. The popular small SUV Ford Escape is now available in hybrid form. The city of Chicago is migrating its fleet of taxis to the Escape hybrid.

Ford is eying Toyota's leadership position with hunger and passion. The next 5-10 years should be extremely interesting as the auto world is changing and morphing onto a higher technology plane. Ford will be right there with the best of them ... watch out Toyota!

Georges Yared is the editor of GameOn Investing, a free service devoted to helping investors spot game-changing stocks before they breakout.

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Before the bell: KBH, AAPL, ERIC, INTU, TM, MSFT

Melly Alazraki — 2008-06-27T08:25:00+00:00

Filed under: Before the bell, Earnings reports, Management, Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO), Apple Inc (AAPL), Toyota Motor Corp. (TM), Employees, Sony Corp ADR (SNE), KB HOME (KBH), Intuit Inc (INTU)

Before the bell: Futures drift lower as oil sets another record high

Since Apple Inc (NASDAQ: AAPL) is no longer insisting on revenue sharing from mobile operators selling its iPhone, China Mobile Ltd (NYSE: CHL) said this cleared the biggest hurdle in bringing the iPhone to mainland China. They just have to resolve some practical issues now.

KB Home (NYSE: KBH) shares climbed over 5.8% in after-hours trading Thursday. The builder is to report results this morning, a quarterly loss is expected.

Sony Ericsson, the joint venture between Sony (NYSE: SNE) and Ericsson (NASDAQ: ERIC) warned Friday it might not see any profit growth in the second quarter, due to slowing demand for some of its higher-priced phones and a delay in shipping new models to the market and will also experience a gross margin squeeze. ERIC shares are down about 6% in premarket trading.

Intuit Inc. (NASDAQ: INTU) will cut about 575 jobs, or about 7% of its workforce, as the result of a reorganization to Internet-based service. The company expects the cuts to result in a 4 cents a share charge, in the fiscal fourth quarter. Intuit now sees an adjusted fourth-quarter loss of 7 cents to 9 cents a share, a bigger loss than analysts had estimated.

An era is about to end Friday as Bill Gates ends his full-time tenure as Microsoft (NASDAQ: MSFT) -- the world's largest software company -- leader. The Microsoft founder and visionary leaves the company after a failed attempt to acquire Yahoo! Inc. (NASDAQ: AAPL) as it tries to gain market shares in internet search where Google Inc. (NASDAQ: GOOG) dominates. It will be interesting to see how the company continues on without his daily guidance, and if anything, perhaps something to watch as investor worry what will happen if Steve Jobs retired.

Toyota Motor Corp. (NYSE: TM) "may implement a broad price hike for cars and trucks sold in Japan to help offset surging prices for steel and other materials, according to a Japanese media report Friday."

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Even Toyota (TM) is going to struggle

Steven Mallas — 2008-06-25T12:36:00+00:00

Filed under: Bad news, Ford Motor (F), General Motors (GM), Toyota Motor Corp. (TM)

Well, I can't predict when the market will turn, or when Toyota's (NYSE: TM) stock will once again be in favor, but I can tell you that I won't be buying its shares here. According to this article, Toyota may not do as well as it planned in terms of sales in 2008 in the U.S. market. The company told investors that year-over-year growth in the number of cars sold is now in question. In 2007, Toyota moved 2.62 million automobiles in the U.S., and for 2008, Toyota wanted to sell 2.64 million cars.

I probably don't need to say it, but I will: considering the negative trends in oil futures, gas prices, consumer confidence, inflation, recession potential, and the housing industry, the fact that the stocks of Toyota, General Motors (NYSE: GM), and Ford (NYSE: F) are having a really tough time right now is not surprising. Toyota's stock closed down 2% on the news of the sales struggle at the end of Tuesday's trading session. That's not a particularly horrible downward move, and the stock is still a few bucks above its 52-week low, but I think there's a chance the stock will take out that low at some point.

Investing in the auto industry might be a dicey move here. Sure, you could pick up some bounces, but being early in this space could prove depressing for even the heartiest investor. Auto sales might get worse before they get better (they're pretty bad now as it is), so I'll stay away from Toyota and this sector.

Disclosure: I don't own any company mentioned here; positions can change at any time.

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Is the Chevy Volt 'a huge mistake' for GM?

Michael Rainey — 2008-06-24T14:55:00+00:00

Filed under: Products and services, General Motors (GM), Toyota Motor Corp. (TM)

The bad news just keeps coming for General Motors (NYSE: GM). The beleaguered auto giant has announced that it will offer 0% financing to help get rid of its growing inventory of inefficient trucks and SUVs, even as it is forced to raise prices due to higher raw material costs. Its once proud Hummer brand is now an albatross that the company is considering unloading. And its market cap of $7.5 billion is lower than not only Toyota (NYSE: TM) but also ailing Ford (NYSE: F) -- GM has lost so much value that a writer at CNNMoney is making the argument that it should be removed from the Dow Jones Industrial Average.

One bright spot for GM has been the Chevy Volt, a hybrid car that has generated considerable excitement in the automotive press. The design of the car is groundbreaking, with a large battery that is recharged by a small gas engine. This is an advance over the popular Toyota Prius and other hybrids, which are essentially gasoline-powered vehicles that use batteries to improve mileage and emissions. With the Volt, scheduled for production for the 2010 model year, GM could claim a real technological advance for the first time in years, and maybe regain some market share.

But there's only one problem: it is highly unlikely that GM will be able to deliver the Volt as promised, according to an Atlantic piece about the car. The article is filled with fascinating details about the ongoing development of the car, especially the frantic pace and rapid innovation required to get the car into production shape. But an unnamed executive told the magazine that this is exactly the problem. The development process has been too compressed, which will force GM to either fail to meet its target date or, worse, to deliver an inferior product. As the executive put it, "They're making a huge mistake."

Ordinarily, it takes years to develop a new car, even with a rapid development schedule. And when new technologies are involved, it takes more time rather than less. For one thing, auto companies need time to test the reliability of a new vehicle. The design of the Volt's most important feature, its lithium-ion battery, is still in flux; in fact, GM is still taking bids for its production, with three manufacturers in competition. This means that if there is a Volt in 2010, it will be a bit of a mystery car, with unknown reliability as it ages.

Another problem with the Volt is its likely cost. Even is the car is a hit, it won't make GM much money. It may even cost GM money on every unit sold, since the company will probably have to subsidize the car for quite some time. Even with a subsidy, though, the car will be expensive for consumers, with a sticker price of at least $35,000, possibly more.

Optimists say that there is much to like about the Volt, even if it experiences a rough start. For one thing, GM is finally doing something to turn the company around. The Volt's development team has been working outside of GM's sluggish bureaucracy and has already made considerable progress. For another, GM is finally ahead of the pack with a new technology.

So even if the company over-promises and under-delivers, as seems likely, the Volt will have served the important purpose of waking GM from its SUV-induced slumber. Of course, that's assuming that the company survives the process.

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Before the bell: NYX, NOK, UAUA, GIS, GOOG, TM ,,,

Melly Alazraki — 2008-06-24T08:13:00+00:00

Filed under: Before the bell, Google (GOOG), Microsoft (MSFT), Apple Inc (AAPL), Toyota Motor Corp. (TM), Nokia Corp. (NOK), NYSE Euronext (NYX), General Mills (GIS), UAL Corp (UAUA)

Before the bell: Futures lower on UPS warning, oil, ahead of Fed meeting,

NYSE Euronext (NYSE: NYX) will pay $250 million in Qatar's Doha stock exchange, the Doha Securities Market (DSM), in return for a 25% stake. It makes sense for NYX to expand into the Middle East as that region is becoming more financially influential.

Nokia (NYSE: NOK) is paying $410 million to buy out the rest of Symbian, a maker of operating systems for mobile phones. This move, announced just as Google (NASDAQ: GOOG) said its Android system will be delayed, could help Nokia as it becomes more entrenched in the marketplace. While Microsoft's (NASDAQ: MSFT) Windows Mobile operating system is Symbian's closest rivals, its still new kid Apple Inc. (NASDAQ: AAPL)'s iPhone that captures the interest of many.

United Airlines (NASDAQ: UAUA) said Monday it will cut about 950 pilot jobs out of its 6,600 pilots beginning this summer. The airline has already announced cutting 1,600 salaried positions and reduce its fleet. UAUA shares, already sliding nearly 15% Monday, continue to decline in premarket trading as airlines will likely stay in focus.

General Mills (NYSE: GIS) increased the quarterly dividend to 43 cents from 39.25 cents, payable Aug. 1 to holders of record July 10.

According to The Wall Street Journal, Google Inc. (NASDAQ: GOOG) is planning to unveil, as soon as today, a new tool that measures Internet usage by using data from Web servers. The tool will help advertisers find out what sites its target audience visits and display/buy their ads there.

Toyota Motor Co. (NYSE: TM) may not be able to meet its target for vehicles sold in the U.S. in 2008. Toyota originally intended to sell more cars this year than in 2007, but in light of the the economic slowdown, this may not be feasible. Toyota will review its sales targets in July.

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John McCain's $300 million electric car battery prize is a political stunt

Jonathan Berr — 2008-06-23T15:16:00+00:00

Filed under: Ford Motor (F), General Motors (GM), Toyota Motor Corp. (TM), Politics, Presidential elections

Presumptive Republican presidential candidate John McCain's plan to award a $300 million prize "for the development of a battery package that has the size, capacity, cost and power to leapfrog the commercially available plug-in hybrids or electric cars " raises many questions.

For one thing, what does he mean by "leapfrog?" Does the McCain car have to be 10?% better? 20% better? or 30% better? Will a marginal improvement suffice? Moreover, who is going to decide whether the goal is met? environmentalists? the automakers? the government? These people can not agree on what we should do to reduce air pollution; I can't imagine the fights that will occur over what constitutes a technological "leap."

McCain wants the car to deliver a power source at 30% of the "current costs." Does that mean costs as of 2008 or whenever this wonder car is ready to be sold to consumers? How does he define "costs?" Is it the total cost of ownership or a reduction in the sticker price or something else entirely? Why limit it to batteries? What about hydrogen fuel cells whose only pollution is water vapor?

In a speech he delivered today, McCain pointed out that "right now we have a hodgepodge of incentives for the purchase of fuel-efficient cars." Indeed, purchasing a hybrid only makes economic sense for the most die-hard of tree huggers. But is the answer to skyrocketing gasoline price to be found in a contest? I am not so sure.

The $300 million seems like it may cover a fraction of the product development costs for Ford Motor Co., (NYSE: F) General Motors Co. (NYSE: GM), or Chrysler LLC. of bringing this new type of vehicle to market. Toyota Motor Corp. (NYSE: TM) and Honda Motor Ltd. (NYSE: HMC) already are light years ahead of the U.S. automakers in alternative fuel vehicles and may reach the McCain milestones without a prize.

Whichever automaker lays claim to this prize -- if Congress ever approves it -- probably will seek loads of additional tax breaks for itself and for the people who buy the wonder car. For a guy who hates big government, McCain sure does not mind giving away taxpayers' money through a prize that will need to be administered through a large cumbersome bureaucracy.

Maybe the prize has something to do with his new "energy security" advertising campaign. Remember that automakers are having trouble keeping up with the surging demand for hybrid vehicles now because they are "unable to make enough batteries and other hybrid component systems to meet rising global demand," according to the Detroit Free Press. Why not give a prize for solving that problem?

The McCain plan, just like his call for a gas tax holiday, is just a stunt to distract voters from the Republican's sorry record on the environment.

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Toyota and General Motors: The race to the bottom?

Brian White — 2008-06-23T11:00:00+00:00

Filed under: Competitive strategy, General Motors (GM), Toyota Motor Corp. (TM)

When Toyota Motor Corp. (NYSE: TM) announced that is had sold its one-millionth Prius hybrid car, environmentalists worldwide stood up and cheered. After all, it was Japanese foresight that saw the need for 45-MPG cars more than just a few years ago and all it took for the sales to take off was the onslaught of $4/gallon gas. But as this National Labor Committee analysis explains, is Toyota the touchy-feely auto manufacturer that it seems to be? In a word, no.

The push to get products to the market as fast as possible (hopefully, the "right" products) has turned Toyota into a labor-abusing monolith of corporate greed, according to the article. While General Motors Corp. (NYSE: GM) pays its workers very well from a labor standpoint and gives the labor force a large voice, Toyota's workers are overworked, underpaid and abused in other ways. Is there a good, middle ground? The appetite of U.S. consumers to purchase more fuel-efficient cars -- something Detroit is still unprepared for in many ways -- is giving Toyota unprecedented levels of new business. All this business is creating demand, and in turn, Toyota must form a method to get those products out the door. According to the NLC, turning the screws on human labor rights is the key to all this.

Is it really the "race to the bottom?" As in, the bottom of the price barrel where "worst practices" are adopted as a form of competitive pressure to ensure those sales continue to rack up? The distinction between labor practices for Toyota's Japanese workers and GM's American workers is pretty stark in this example. It seems to strongly suggest that all those Prius owners who believe they are helping the world by bellowing out less emissions and wasting less gas are paying for it in another way -- in the form of human rights abuses they never see.

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U.S. automakers discover that size matters

Joseph Lazzaro — 2008-06-20T11:31:00+00:00

Filed under: Industry, Competitive strategy, Ford Motor (F), General Motors (GM), Toyota Motor Corp. (TM), Oil

With the U.S. economy in slow-growth / no-growth mode, domestic demand for autos has been low, as predicted. However, almost on cue, demand for smaller vehicles has been robust.

That cue is $4 gasoline, The New York Times reported Friday. Or, as one Harrison, N.Y. resident called her monthly gasoline bill, "My car payment in addition to my car payment."

A 60-70% increase in gasoline prices in the last two years has led to a large increase in demand for small cars and hybrids, The Times reported, with limited supply of some of the most-preferred models creating further frustration for automakers and purchasers alike.

The more things change...

Economist Glen Langan said a great deal has changed during the time between the last oil shock in 1979-80 and today's oil shock: long hair for men is out, as are bell-bottom pants, and album-oriented rock (mainly because there are no more record albums). One thing hasn't changed: U.S. automakers, once again, "were dramatically under-prepared for the high gas price era."

An example: Ford (NYSE: F) is running its Focus assembly plant in Wayne, Mich. on overtime and on Saturdays but still cannot meet demand for the higher-mileage Focus, The Times reported.

"U.S. automakers are using phrases like 'seismic shift' in the market place and 'events out of nowhere to disrupt our production plans,' but the reality is oil and gasoline prices have been trending higher for more than eight years. I mean eight years," Langan said. "What were they thinking when gas prices were rising with rising gasoline demand, and China and India entering global commerce? That gasoline would drop to 25 cents a gallon?"

Langan said the consequences stemming from Ford's and General Motors' (NYSE: GM) latest production failure will be fewer jobs in the U.S. and less spin-off economic activity from that job reduction, in addition to not nearly enough high-mpg cars to meet U.S. demand.

Auto Sector Analysis: In fairness to Ford, General Motors and Chrysler, foreign automakers are also straining to meet demand for fuel-efficient vehicles, on all continents. Still, that does not blot-out the fact that there are objective events that demonstrate why the right side of GM's and Ford's stock charts are lower than the left.

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GM's SUV development gets arrested

Douglas McIntyre — 2008-06-19T09:35:00+00:00

Filed under: Competitive strategy, General Motors (GM), Toyota Motor Corp. (TM)

GM (NYSE: GM) has decided that it will come close to suspending development of new SUVs. The market for the trucks is so bad that even Toyota (NYSE: TM) thinks it will lose money on the beasts in the US this year.

The Wall Street Journal reports "General Motors Corp. is delaying the redesign of SUVs and full-size trucks as part of a wholesale review of its product." For those not watching the car business over the last year, GM's decision comes way too late.The company should have cut back SUV development some time ago and made an attempt to get more of the mid-sized sedan market controlled by the Japanese.

It is easy to say that GM could not have seen the future, but that would be slighting companies like Nissan and Honda (NYSE: HMC) which was early in marketing more fuel-efficient cars.

GM is paying dearly for its mistake. Its shares hit a multi-year low at $14.75 in trading yesterday. They have not been so low since the Arab Oil Embargo in 1974.

How ironic.

Douglas A. McIntyre is an editor at 247wallst.com.

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Shanghai falls almost 7% (TM) (SNP) (LFC)

Douglas McIntyre — 2008-06-19T04:01:00+00:00

Filed under: Major movement, International markets, China, Toyota Motor Corp. (TM), Japan, China Life Insurance ADS (LFC)

Markets in Asia were troubled by rising oil and concerns that the global economy is getting into more trouble as each week passes.

The Shanghai Composite fell 6.5% to 2,749.

In Hong Kong, the Hang Seng fell 2.2% to 22,807. China Life (NYSE: LFC) dropped 3.1% to 28.3 yuan. China Petroluem (NYSE: SNP) fell 3% to 8.07.

In Tokyo, the Nikkei dropped 2.2% to 14,130. Mazda fell 5.5% to 568 yen. Toyota (NYSE: TM) dropped 3.2% to 5490 on concerns that its truck sales were falling in the US.

Data from Reuters.

Douglas A. McIntyre is an editor at 24/7 Wall St.

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Ford's folly: Cutting more jobs

Douglas McIntyre — 2008-06-14T11:40:00+00:00

Filed under: Industry, Ford Motor (F), Toyota Motor Corp. (TM), Economic data, Recession

Ford Motor Co. (NYSE: F) has decided to take even more costs out if its operations. Where it will find the people and extra expenses is almost impossible to imagine. According to The Wall Street Journal (subscription required), "with more than half of Ford's plant saddled with excess capacity, Ford officials believe the push to control overtime is paramount."

The car company is also sending signals that it will have to take out more people.

Ford has almost certainly reached the fork in the road. At some point, the company will not have the capacity to rebuild its business when the domestic market begins to come back. The real competitors in the market, Toyota (NYSE: TM)and Honda (NYSE: HMC) will keep investing in new development and marketing, and will keep their abilities to manufacture new products at reasonable levels.

Ford may be able to save its present by sacrificing its future. And, if things go badly, it will not matter how much the company cuts. The U.S. car market is that bad.

Douglas A. McIntyre is an editor at 247wallst.com.

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Don't worry, the U.S. will make a decent electric car -- by 2014

Carol Vinzant — 2008-06-13T16:20:00+00:00

Filed under: General Electric (GE), Ford Motor (F), General Motors (GM), Toyota Motor Corp. (TM), Japan, Technology

The Department of Energy announced it was throwing some money at the electric car dream yesterday. They'll spend "up to $30 million in funding over three years" on three projects they hope will produce a viable electric car by 2014. Wow, that's a whole $10 million a year!

The DOE is funding three projects they hope will produce an electric car that can go 40 miles on a charge, enough for 70% of daily commuters. They made the announcement at a conference on Plug-in Electric Vehicles 2008: What Role for Washington? Apparently the Energy Department decided the role was to make a token amount of funding and let other countries take the lead. The plan is to split the cost 50-50 with industry. General Motors (NYSE:GM) is going to work on a Lithium-Ion battery. Ford (NYSE:F) will work on a way to speed up mass production of electric cars. And General Electric (NYSE:GE) will try to figure out a two-battery, 40-mile system.

I'm sure everyone's working on all sorts of other projects, but this one just seems tiny, especially in context of the current oil crisis and the $40.1 billion requested Department of Transportation budget for FY2009. As cNet's Elsa Wenzel helpfully points out, Toyota (NYSE:TM), working with Matsushita Electric Industrial (NYSE:MC), thinks it can mass market an electric car by 2010.

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SmartMoney suggestions to avoid the pitfalls of falling oil prices

Eliza Popescu — 2008-06-13T15:51:00+00:00

Filed under: Forecasts, Toyota Motor Corp. (TM), Economic data, Oil

With the soaring oil prices, oil bulls have been benefiting from nice gains lately but there are some pessimistic signs that this may be about to change. The Fed's comments related to inflation stirred some worries among investors that interest rates could be lifted soon. A boost in interest rates will immediately lead to a stronger dollar, and could (and should) result in a sell off in crude.

Talking about this circumstance, SmartMoney is thinking about the best way to protect ourselves against losing money. As a first step, SmartMoney suggests that we reduce commodities and increase our allocation in stocks. To back up this idea, the article cites Simeon Hyman, equity strategist of the portfolio advisory group at Lehman Brothers' private investment management unit, who said the company is currently lighter on commodities and "fully invested" in stocks.

David Reilly, director of portfolio strategies at Rydex Investments, is taking into account the possibility of investing in Japan, which "is the most oil-dependent of all major economies. Reilly cites companies such as Toyota Motor (NYSE: TM) and Canon (NYSE: CAJ) which could benefit from investors' attention due to declines in crude oil prices.

Scott Wren, senior equity strategist at Wachovia Securities, believes that "commodities are likely to be flat to down over the next year or so, and falling oil prices are going to help the better economic scenario we're projecting." As a piece of advice, he recommends investors to buy stocks like UltraShort Oil & Gas ProShares (AMEX: DUG).

On the other hand, one analyst at Morningstar, Jeffrey Ptak, is totally opposed to these beliefs. "You're doubling down, getting 200% exposure. For a certain kind of very aggressive, high-conviction investor a strategy like that might make sense, but they're not for the vast majority," Ptak stated. He points out to another strategy that could help oil bears and this might be to short a basic oil ETF such as United States Oil (AMEX: USO).

Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.

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GM now says Europe is weak

Douglas McIntyre — 2008-06-12T09:46:00+00:00

Filed under: Industry, Toyota Motor Corp. (TM), General Mills (GIS), Oil

Investors in GM (NYSE: GM) have hoped that overseas sales would help offset the tremendous weakness of the car company's U.S. operations. When it comes to Europe, no such luck. That leaves fewer and fewer places for the firm to make money.

According to Reuters, "General Motors Corp's head of European operations said rising oil prices, high commodity costs and the strength of the euro could drive European sales down to levels not seen in decades." Sales in China and Latin America are pretty much all that is left to push up margins.

It is fair to ask how much of this is GM's fault. The answer is a large amount of it. The core reason for the sales slump in Europe is the same as in the US: Gas prices are up. Fewer people may be buying cars, but when they are, they want fuel-efficient models. Firms like VW and Toyota (NYSE: TM) are sitting there waiting to whisk those customers into their showrooms.

Buicks and Cadillacs may sell well in China were the cost of gas is underwritten by the government. But GM's problems in Europe could have been, to some extent, avoided. Mile-per-gallon and miles-per-meter may sound different, but they really aren't.

Douglas A. McIntyre is an editor at 247wallst.com.

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Another sell-off in Asia, Shanghai down almost half this year

Douglas McIntyre — 2008-06-12T03:56:00+00:00

Filed under: International markets, China, Toyota Motor Corp. (TM), Sony Corp ADR (SNE), Japan, China Life Insurance ADS (LFC)

A number of markets in Asia were down 2% or more lead by the Shanghai Composite which is off 45% since the beginning of the year, according to MarketWatch.

In Japan, the Nikkei dropped 2.1% to 13,888.6. Sony (NYSE:SNE) was down 2.8% to 5,130 yen. Toyota (NYSE:TM) was off 2.7% to 5,400.

The Hang Seng fell 1.7% to 22,925.31. China Life (NYSE:LFC) fell 2.4% to 28.40 yuan. China Petroluem (NYSE:SNP) dropped 2.7% to 7.39.

Data from Reuters.

Douglas A. McIntyre is an editor at 247wallst.com.

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Toyota (TM): A car that plugs-in like a toaster

Douglas McIntyre — 2008-06-11T09:12:00+00:00

Filed under: Launches, Consumer experience, Competitive strategy, Toyota Motor Corp. (TM)

Toyota (NYSE: TM) is upping its bet on ion lithium-battery cars. It has set up a joint-venture with Matsushita Electric Industrial to start mass production of the power sources by 2010.

According to Reuters, "Toyota, the world's top maker of gasoline-electric hybrids, is keen to bring such vehicles into the mainstream by lowering their cost premium." Consumers can plug-in their cars before turning in for the night.

The news is another example of why Toyota stays more competitive than most other large car companies. Who would have seen the mass demand for alternative energy cars as oil doubled? Even Toyota could not have predicted that, but the firm was willing to make a significant investment that customers would continue to move away from gas even if prices did not spike up.

In Detroit, the last one to leave the building can pull the plug on the lights. At the US car companies, that is all electricity is good for.

Douglas A. McIntyre is an editor at 247wallst.com and author of the Ten Stocks Under $10 letter.

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Toyota (TM) improves fuel cell technology to 500 miles per hydrogen fill-up

Brian White — 2008-06-10T10:35:00+00:00

Filed under: Products and services, Toyota Motor Corp. (TM)

Toyota Motor Corp. (NYSE: TM) announced yesterday that it has developed a new type of fuel cell hybrid vehicle that can travel more then 500 miles on a single tank of hydrogen. That's right instead of the limited mileage from a pure electric car or a gas-required hybrid vehicle this one just needs hydrogen to hit the 500 mile mark.

Fuel cell vehicles, which have no emissions and are one of the most promising technologies for personal transportation, just got that much better. The deal killer for all hybrid vehicle manufacturers is this: there is no gasoline internal combustion engine needed. Toyota's model requires an electric motor and a hydrogen fuel cell. That's it. The Japanese automaker even said the vehicle would be available in Japan this year, but that there are no plans to distribute it outside that country.

Why not, Toyota? Worried about not being able to supply the demand customers globally may have? Having a zero-gas alternative in some of the most gas-dependent consuming countries in the world would really solidify your track record as the auto manufacturer who "gets it." You've already surpassed General Motors Corp. (NYSE: GM) as the world's largest auto manufacturer. Why not make that crown quite a bit bigger?

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