GM Shares Rise on Buy Recommendations

May 24, 2006

GM Shares Rise on Buy RecommendationsWith General Motors still struggling to sell its buyout plan to blue-collar workers, and struggling to avert a strike at its major supplier,Delphi , times are still tough for the ailing automaker. But GM got a strong vote of support Wednesday from at least one corner of the investment community. Merrill Lynch analyst John Murphy announced that he was morphing from bear to bull, switching his recommendation from Neutral to Buy. The big brokerage set a share price target price of $37, a whopping 50-percent premium over the day's opening price.The bullish forecast sent buyers rushing to their e-brokers, driving shares up $2.02, or 8.25 percent, for the day, to a closing price of $26.50. That's still well below GM's peak, which nudged $38 last summer, during the height of the company's employee discount program. On the other hand, it marks a sizable recovery from GM's mid-winter blahs, when shares dipped below $20.There are several factors driving renewed interest in the automotive giant. GM got a lot of attention for its new, $1.99-a-gallon gas promotion, announced earlier this week. But analyst Murphy's motivation appears to have been growing acceptance of the GM employee buy-out offer, which should significantly drive down operating costs. As of May 3, leaders of the United Auto Workers reported 12,400 workers had agreed to the offer."The take rate will accelerate into the June 23rd deadline," Murphy predicted, in an e-mailed analysis. "We estimate that there will be about 30,000 buyouts."Merrill Lynch has now raised its earnings forecast for 2007 from $1.90 to $4.10 per share, and its 2008 EPS estimate from $3.15 to $5.25. -TCC TeamTheCarConnection Drives Chevy's Camaro    

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  Keogh Heads to AudiAudi of America Inc. on Wednesday named Scott Keogh, 37, a former Mercedes-Benz manager, to the post of chief marketing officer. It's a new position. Previously, the top marketing post at Audi was director of marketing. That post has been held by Stephen Berkov, 37, who now takes on the title of director of brand marketing and innovation and moves to California. Keogh is an experienced marketer, having run public relations as well as advertising at Mercedes. He also was the U.S. chief of Smart USA, but the launch of the DaimlerChrysler brand in the U.S. was scuttled when losses at Smart prompted new management at DCX to question the viability of the project. Berkov is an up-and-comer. His move to California comes at a time when Audi is trying hard to seize the opportunity it sees to gain sales and market share with new product and a much improved brand image. Audi sales are up 5.2 percent through April at 25,296. Berkov will continue to manage day-to-day advertising, dealer marketing, and product integration into movies, TV, and the like. -Jim Burt2007 Audi RS4 by Conor Twomey (5/15/2006)A faithful point-to-point supersedan - but is it better than the M5?   
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  Ford Issuing New Bonds Ford Motor Co. confirmed it is making a private bond offering that seems to spotlight that the automaker is concerned about its short-term cash reserves at Ford Motor Co. and Ford Motor Credit.Under terms of the offer, which is being made privately, holders of about $2.5 billion in bonds with coupons as low as 4.95 percent coming due this fall can swap them for bonds that pay as much as 10.6 percent. The deal, which will allow Ford to hold on to more of its cash this year, will cost the finance unit an estimated $90 million per year.A Ford spokesperson said the company could not comment about the strategic reason for the bond swap. But analysts say that the only reason a company delays paying off bonds in the near term in favor of paying off debt later at a dramatically higher interest rate is because it is concerned about its cash reserve and cash flow in the near term.Ford Motor Co. has about $21 billion in cash, according to its first quarter financial statement. And the finance unit had $16.6 billion in cash at the end of March. The finance unit has $21 billion in bonds coming due this year.Casting a shadow over the automaker and its finance unit now are its junk-rated bond ratings and the slowness of progress in Ford's Way Forward turnaround plan. Ford plans to spend $250 million this year to cover the cost of shedding unionized workers and $220 million to close plants. But Ford is closing a total of 14 plants between now and 2012 and plans to cut 30,000 workers, and that will cost hundreds of millions for years to come.Ford's goal this year was to stop market-share decline. But Ford executives have had to back off that target, because higher gas prices have hammered sales of Ford's SUVs. Sales of Ford branded cars and trucks are off about four percent this year, and its market share has dropped by more than a half-percentage point through April, according to Autodata. Market shares of Jaguar and Volvo are down too. The Ford brand's share of U.S. light vehicle sales fell to 14.8 percent in April, compared with 15.7 percent a year earlier and 25.7 percent a decade ago. Ford plants are operating at only about 75 percent of capacity today.Ford shares closed Wednesday at 6.93, up 1.2 percent. Ford shares are trading 40 percent below their 52-week high. -Jim Burt   
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 Hyundai SUV Won't Be MesaEarlier this month, TheCarConnection reported that the name of the new full-size Hyundai SUV would be Mesa. Sources now tell TCC that the name was one of four tested for the new vehicle but that the ute will not be tagged Mesa, although the name may be used on a future vehicle, potentially a new Kia model.Spy Shots: 2008 Hyundai Mesa by Brenda Priddy (5/15/2006)South Korea's biggest yet.  Honda Links Brains to RobotsFirst, there was Asimo, the Honda robot that could. Now Honda says it's developed a way for humans to control robot's moves with…brainwaves. Working with ATR Computational Neuroscience Laboratories, Honda says its method involves using a magnetic resonance imaging scanner (an MRI) and relaying the signals to a robot through a computer. Honda says the technology could eventually replaced keyboards, cell phones, and help people with spinal cord injuries communicate and use robots to perform functions for them. Honda demonstrated its technology in Tokyo with a robotic hand that responded to instructions to make a fist, spread its fingers, and make a V sign.

 FROM THE SOURCE headlines from the latest press releases Hyundai Debuts ESC Window Decal Alerting Consumers to Life-Saving Technology

 


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Name Symbol Last Change
Autobytel, Inc. ABTL 3.26 +0.13
Autoliv Inc. ALV 54.15 -0.18
AutoNation Inc. AN 21.48 -0.12
ArvinMeritor Inc. ARM 16.18 +0.30
American Axle & Mfr. Holdings Inc. AXL 17.50 +0.49
Ballard Power Systems Inc. BLDP 7.02 -0.38
BorgWarner Inc. BWA 64.92 -0.06
Cummins Inc. CMI 108.40 +0.71
Dana Corporation DCN 0.66 0.00 (0.00%)
DaimlerChrysler AG (ADR) DCX 51.95 +0.33
Dura Automotive Systems DRRA 2.24 -0.04
Eaton Corporation ETN 73.01 -0.91
Ford Motor Company F 6.93 +0.08
General Motors Corporation GM 26.51 +2.03
Gentex Corporation GNTX 14.72 -0.04
Goodyear Tire & Rubber GT 12.93 -0.18
Honda Motor Co. Ltd. (ADR) HMC 33.11 +0.15
Johnson Controls Inc. JCI 81.98 +0.59
Lear Corporation LEA 23.00 +0.25
Magna International Inc. MGA 76.25 -0.52
Motorola Inc. MOT 20.45 -0.22
Nissan Motor Co. Ltd. (ADR) NSANY 24.40 -0.08
Sonic Automotive Inc. SAH 25.04 -0.15
Siemens AG SI 85.43 -1.98
Sirius Satellite Radio SIRI 3.68 -0.22
Toyota Motor Corporation (ADR) TM 109.34 +1.26
TRW Automotive Holdings TRW 26.99 -0.37
Tower Automotive Inc. TWRAQ.PK 0.137 0.00 (0.00%)
United Auto Group Inc. UAG 41.88 +0.19
Visteon Corporation VC 7.08 +0.08
XM Satellite Radio Hold. XMSR 13.75 -1.76

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