|
GM may halt stock buybacks
|
 |
June 26, 1998: 3:27 p.m. ET
Liquidity problems seen affecting auto giant's corporate finance activities
|
NEW YORK (CNNfn) - The United Auto Workers strikes that have crippled General Motors Corp.'s manufacturing have spread beyond its North American operations, industry officials said Friday.
The nation's largest automaker already has told its North American operations to take steps to preserve cash, including idling its 224,000 hourly workers and limiting overtime for salaried employees.
The cash preservation initiatives likely will spread to companywide corporate finance functions, such as stock repurchases and debt retirement.
"Obviously we look at all types of cash conservation activities," said Mark Tanner, GM spokesman.
Although GM's cash level, which stood at $13.6 billion at the end of the first quarter, doesn't present a financial crisis, the liquidity problems could explain why the stock is depressed, analysts said.
"The focus of cash as part of the stock value is a way analysts look at the company," said Ron Tadross, auto analyst at Salomon Smith Barney.
Shares of GM (GM) were down 1 at 66-7/8 in afternoon trading on the New York Stock Exchange.
(Click to view recent stock performance)
In February, GM's board approved the repurchase of $4 billion of stock over a 12-month period. When completed, GM will have retired about $9 billion since January 1997.
"I wouldn't be surprised if that was currently suspended as a function of the strike," Tadross said.
Still the company contends it remains "on track" to achieve its goals. GM's Tanner declined to comment on "day-to-day transactions."
The strike began on June 5 at the Flint Metal Center in Flint, Mich., over the union's concerns of outsourcing and health and safety issues. But GM argues that UAW workers aren't living up to their productivity goals as set forth in their employment contracts.
And due to an additional walkout at a Delphi East parts plant in Flint, 26 out of 29 North American production facilities have been knocked out. Meanwhile, the strike continues to affect other regions.
Superior Industries International Inc. (SUP), a Van Nuys, Calif.-based wheel maker, no longer expects to meet Wall Street's earnings expectations, a company spokesman said.
Superior is expected to earn 57 cents a share, according to First Call. The company -- which relies on GM for 47 percent of its business -- already has closed two of its seven plants in Tennessee and Kansas, idling nearly 1,000 workers.
And Johnson Controls Inc. (JCI) -- a maker of automotive interiors that relies on GM for 11 percent of its $11 billion in annual sales -- has laid off 1,570 workers and temporarily closed three seat plants. 
-- by staff writer Robert Liu
|
|
|
|
|
|
GM
UAW
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
