DETROIT: General Motors Co Chief Executive Ed Whitacre resigned on Thursday, Aug 12 in an abrupt move that renewed questions about leadership at the automaker as it readied a stock offering critical to paying back its controversial U.S. government bailout.
Dan Akerson, 61, a veteran private equity investor little known in auto circles, replaces Whitacre, 68, as of September. Akerson had been appointed by the Obama administration as one of the directors meant to safeguard the government's $50 billion financing to restructure GM.
Whitacre's departure had been expected, but the timing of his announcement caught even GM insiders off guard, just a day before GM was expected to file the paperwork for a landmark stock offering that would mark its reemergence as a publicly traded company a year after bankruptcy.
Whitacre, who continued to commute from his home in Texas during his stint as CEO of the Detroit-based company, had said repeatedly he would be an interim leader.
"It was obvious that I was not going to be at GM for the long haul," Whitacre said at the end of a conference call to discuss the company's second-quarter earnings.
Jeffrey Sonnenfeld, a management expert at the Yale School of Management, said Whitacre was having a positive impact at GM and should have stayed on under normal circumstances.
"The instability certainly is a shock to insiders; it's stunning to outsiders and you don't usually have that happen," Sonnenfeld said. "There is a story here that we are not getting. Clearly this was not part of a planned succession."
A former AT&T Inc chief executive, Whitacre had been expected to stay on at GM through the filing of the IPO. As recently as last week, he described plans for a series of meetings with big investors to tout the offering.
The sudden management change could delay GM's planned IPO filing on Friday by a few days, as the documents are reviewed and new management is added as a risk factor in the filing, reflecting the shake-up, a source familiar with the matter said.
The U.S. Treasury said GM's board made the decision, which did not require government approval.
"We have put a strong foundation in place, so I am very comfortable with my timing," Whitacre said.
Akerson, also a former CEO at Nextel, will become GM's fourth chief executive in just a year and a half, underscoring the challenge in remaking the corporate culture of an automaker still in the early stages of a turnaround.
A managing director of The Carlyle Group for the past seven years, Akerson spearheaded some of the private equity firm's biggest recent deals, including the buyout of energy company Kinder Morgan.
Analysts said Akerson's appointment could head off any investor concern about succession issues at GM. But the move also thrusts an executive known for quiet deal making into the spotlight as salesman in chief for the top U.S. automaker.
BIGGEST PROFIT IN SIX YEARS
Separately, GM posted a second-quarter profit of $1.3 billion as evidence of a turnaround driven by cost-cutting in its 2009 bankruptcy and better sales in the United States.
The second-quarter profit was the largest since 2004, when the U.S. auto market was still booming with annual sales of near 17 million vehicles and GM's brands accounted for more than one in four purchases of new cars and trucks.
The results reflected a 47 percent snap back in global production from the depressed levels of a year earlier, when GM began operating under bankruptcy.
Revenue rose to $33.2 billion from $31.5 billion in the first quarter.
Analysts expect the company to use the results to build the case for a record stock offering and allow the U.S. government to reduce its 61 percent ownership stake.
The government is considering selling that stake in several pieces over two or three years, but the exit could go faster or slower, a source told Reuters.
A successful GM IPO would provide the Obama administration with evidence the unprecedented and unpopular intervention in the U.S. auto industry has been a financial success.
Europe, where GM is still struggling to restructure its Opel unit, remained a notable weak link for the automaker, with an operating loss of $160 million.
North America had an operating profit of $1.6 billion. International operations, including GM's China joint ventures with SAIC and Wuling, had an operating profit of $672 million.
Despite GM's recovery over the past year, analysts say it still faces a challenge in winning back consumers because of the lingering stigma from its bailout and the "Government Motors" label from critics.
GM lost about $88 billion between 2005 and 2009 when it was driven into bankruptcy by plunging sales and tight credit.
GM's U.S. market share was just over 19 percent in the quarter that ended in June, down from almost 21 percent a year earlier when it was still selling the now-scrapped Saturn, Saab, Pontiac and Hummer brands.
GM's results show it is trailing its more successful and smaller rival, Ford Motor Co, which posted a second-quarter profit of $2.6 billion, but ahead of Chrysler, which lost $172 million.
Sources told Reuters on Wednesday the largest U.S. automaker had secured a $5 billion credit facility, marking its return to the capital markets a year after it emerged from a government-funded landmark bankruptcy.
GM Chief Financial Officer Chris Liddell declined to comment when asked about the credit facility. He said the arrangement was "one of the building blocks" GM needed to restore its balance sheet. - Reuters
Dan Akerson, 61, a veteran private equity investor little known in auto circles, replaces Whitacre, 68, as of September. Akerson had been appointed by the Obama administration as one of the directors meant to safeguard the government's $50 billion financing to restructure GM.
Whitacre's departure had been expected, but the timing of his announcement caught even GM insiders off guard, just a day before GM was expected to file the paperwork for a landmark stock offering that would mark its reemergence as a publicly traded company a year after bankruptcy.
Whitacre, who continued to commute from his home in Texas during his stint as CEO of the Detroit-based company, had said repeatedly he would be an interim leader.
"It was obvious that I was not going to be at GM for the long haul," Whitacre said at the end of a conference call to discuss the company's second-quarter earnings.
Jeffrey Sonnenfeld, a management expert at the Yale School of Management, said Whitacre was having a positive impact at GM and should have stayed on under normal circumstances.
"The instability certainly is a shock to insiders; it's stunning to outsiders and you don't usually have that happen," Sonnenfeld said. "There is a story here that we are not getting. Clearly this was not part of a planned succession."
A former AT&T Inc chief executive, Whitacre had been expected to stay on at GM through the filing of the IPO. As recently as last week, he described plans for a series of meetings with big investors to tout the offering.
The sudden management change could delay GM's planned IPO filing on Friday by a few days, as the documents are reviewed and new management is added as a risk factor in the filing, reflecting the shake-up, a source familiar with the matter said.
The U.S. Treasury said GM's board made the decision, which did not require government approval.
"We have put a strong foundation in place, so I am very comfortable with my timing," Whitacre said.
Akerson, also a former CEO at Nextel, will become GM's fourth chief executive in just a year and a half, underscoring the challenge in remaking the corporate culture of an automaker still in the early stages of a turnaround.
A managing director of The Carlyle Group for the past seven years, Akerson spearheaded some of the private equity firm's biggest recent deals, including the buyout of energy company Kinder Morgan.
Analysts said Akerson's appointment could head off any investor concern about succession issues at GM. But the move also thrusts an executive known for quiet deal making into the spotlight as salesman in chief for the top U.S. automaker.
BIGGEST PROFIT IN SIX YEARS
Separately, GM posted a second-quarter profit of $1.3 billion as evidence of a turnaround driven by cost-cutting in its 2009 bankruptcy and better sales in the United States.
The second-quarter profit was the largest since 2004, when the U.S. auto market was still booming with annual sales of near 17 million vehicles and GM's brands accounted for more than one in four purchases of new cars and trucks.
The results reflected a 47 percent snap back in global production from the depressed levels of a year earlier, when GM began operating under bankruptcy.
Revenue rose to $33.2 billion from $31.5 billion in the first quarter.
Analysts expect the company to use the results to build the case for a record stock offering and allow the U.S. government to reduce its 61 percent ownership stake.
The government is considering selling that stake in several pieces over two or three years, but the exit could go faster or slower, a source told Reuters.
A successful GM IPO would provide the Obama administration with evidence the unprecedented and unpopular intervention in the U.S. auto industry has been a financial success.
Europe, where GM is still struggling to restructure its Opel unit, remained a notable weak link for the automaker, with an operating loss of $160 million.
North America had an operating profit of $1.6 billion. International operations, including GM's China joint ventures with SAIC and Wuling, had an operating profit of $672 million.
Despite GM's recovery over the past year, analysts say it still faces a challenge in winning back consumers because of the lingering stigma from its bailout and the "Government Motors" label from critics.
GM lost about $88 billion between 2005 and 2009 when it was driven into bankruptcy by plunging sales and tight credit.
GM's U.S. market share was just over 19 percent in the quarter that ended in June, down from almost 21 percent a year earlier when it was still selling the now-scrapped Saturn, Saab, Pontiac and Hummer brands.
GM's results show it is trailing its more successful and smaller rival, Ford Motor Co, which posted a second-quarter profit of $2.6 billion, but ahead of Chrysler, which lost $172 million.
Sources told Reuters on Wednesday the largest U.S. automaker had secured a $5 billion credit facility, marking its return to the capital markets a year after it emerged from a government-funded landmark bankruptcy.
GM Chief Financial Officer Chris Liddell declined to comment when asked about the credit facility. He said the arrangement was "one of the building blocks" GM needed to restore its balance sheet. - Reuters
No comments:
Post a Comment