Some of my liberal friends linked this report on Whitacre’s departure from GM…

from the WAPO trying to pretend that Whitacre’s leaving was totally voluntary:

Washington Post

Please read it to reference this post or you won’t have the context.  This is nothing more than Administration propaganda.  No “analyst”–other than a White House “analyst”–would estimate the offering to hit $70 billion.  The largest IPO in history thus far was at the height of the economic expansion in 2006 by the Industrial and Commerce Bank of China, and it was only $22 billion.  And the bank was, to put it mildly, wildly successful.  Anyone who thinks that a car company that has struggled to generate all of $2 billion dollars in profit in the last year and half, almost 80% of which can be attributed to a $16.7 billion tax credit scheme the White House cooked up to try to “cook the books” for those of us they consider their intellectual inferiors; that has not structurally changed anything that drove it into bankruptcy in the first place; and that made sure that real investors were pushed to the back of the line behind unions and other special interests in the first bankruptcy; could in any way generate a $70 billion IPO is living, as this Administration often does where matters of business and common sense are involved, in a fantasy world.

The last “real” estimate I heard for the IPO was $10-12 billion, and as I said–IMO, it won’t happen–unless, I guess, the Administration reprises its Godfather act and threatens Wall Street with more taxes and regulation if it doesn’t eat the crap sandwich.

And the story that it was either this or the long haul is bs, too. No board is going to lay down an ultimatum that its CEO agree to stay on for a protracted length of time or resign if the IPO looks like it has any chance to be successful. I can imagine it now–“Yeah, we like Eisner’s work at Disney and he’s put together an IPO that dwarfs any in history, but hey–he wouldn’t commit to the long term so we thought we’d let him go right before the offering..” If that makes any sense, you need to get out more. It wasn’t voluntary or a business-based decision (see “Obama Administration”). Now, I may be off on the reason, but the timing submarines the IPO and will shake market confidence such that it could be postponed indefinitely. And Whitacre (and the board, if it isn’t made up of leftist hacks) is smart enough to know that–the Administration, not so much.  And even if, as reported in Bloomberg, the underwriters needed a succession plan for their “road show” (where the underwriter tries to sign up subscribers to the IPO before it hits the market), it didn’t require that Whitacre resign–only that he present an acceptable replacement candidate to the board.

There would have been nothing untoward about waiting until after the IPO for Whitacre to announce he was leaving. Even if he was required to give any kind of notice, it would have delayed his departure by only days. But if the IPO looked like it wasn’t going to make it at all, his exit would be a convenient excuse instead of announcing there just wasn’t any interest in investing in a company the government already runs like a fiefdom.

The fact is GM has not been reorganized from the mess it was as it nose-dived toward bankruptcy. All it’s done is get $60 billion of taxpayer money, unfettered access to the leftover billions from TARP1, and show a $1.6 billion “profit” that’s mostly due to a special $16.7 billion tax credit scheme. Meanwhile, Ford’s made roughly 3X more ($4.7 billion over the same period) without special credits or taxpayer money and its market cap is only $42 billion. As many predicted, we’ve just temporarily stabilized the situation and given the unions more time to push the inevitable end to this failed experiment into the future–there have been no structural changes. I have no doubt Whitacre knew this was the case. But putting off the announcement a week–especially if the successor was already known and ready to step up–in order to see the company through an IPO should have been automatic for both the board and Whitacre.


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