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GM announces job cuts, suspends dividend
U.S. automaker will borrow at least $2 billion in to bolster liquidity
BREAKING NEWS
MSNBC News Services
updated 8:38 a.m. ET, Tues., July. 15, 2008
DETROIT - General Motors Corp said on Tuesday it would cut salaried employment costs by 20 percent, sell up to $4 billion of assets and borrow at least $2 billion in a bid to bolster its liquidity by $15 billion through 2009.
GM also said it would suspend its common stock dividend in a restructuring driven by high fuel prices, a shift away from trucks and SUVs, and the lowest U.S. industrywide auto sales in a decade.
GM Chairman and CEO Rick Wagoner discussed the changes at a news conference Tuesday morning.
The changes come amid pressure from Wall Street for GM to cut some of its eight brands, but it wasn’t clear whether GM would make such an announcement Tuesday. The company has said it is exploring the sale of its Hummer brand, known for its hulking SUVs, but GM’s vice president of North American sales, Mark LaNeve, told dealers in a letter last week that no other brands are under such a review.
Just six weeks ago, GM said it will close four truck and SUV plants and boost production of the smaller, more fuel-efficient cars that customers are demanding. It also announced production of a new car that could get 45 miles to the gallon and would go on sale in 2010.
But for an impatient Wall Street, those changes weren’t enough, and the company’s shares have hit a series of 50-year lows since July 2.
GM shares fell 54 cents, or 5.4 percent, to close at $9.38 Monday. They regained 18 cents in after-hours trading after GM’s statement that it is taking actions “to align the business to current market conditions.”
GM and other auto companies have been hammered by high gas prices, the weak economy and a rapid shift in consumer tastes away from trucks and SUVs. GM’s sales were down 16 percent in the first six months of this year, led by a 21 percent decline in truck sales. In May, Toyota Motor Corp. came close to overtaking GM as the top-selling company in the U.S.
The Associated Press and Reuters contributed to this report.
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GM announces job cuts, suspends dividend (July 2008 Pre-Conference Call)
