General Motors Co and eBay Inc are launching a test program in California that will allow consumers to negotiate with dealers and buy
new vehicles online, the companies said on Monday.
The car shopping website, gm.ebay.com, marks a departure from the way new vehicles have traditionally been sold in the United States and is aimed at helping GM recapture lost market share a month after it emerged from bankruptcy.
The online marketplace provides the No 1 US automaker with a new venue to sell new vehicles as it cuts the number of US dealerships by more than 40 percent to 3,600 by the end of 2010 as part of its efforts to return to profitability.
It also expands an existing partnership covering GM's certified used vehicles sold through eBay. Most of the vehicles sold on eBay Motors, a site that sells various types of vehicles and auto parts, have been used.
More than 225 GM dealers in California are participating in the program, which will run from Aug. 11 through Sept 8. GM said it intends to expand the program nationwide if the pilot helps it reach new customers and gain market share.
The website allows consumers to compare pricing across models and participating dealerships, negotiate prices, and arrange financing and payment. Consumers can agree to pay the advertised price or indicate the price they are willing to pay and can negotiate online with the dealer for the vehicle.
More than 20,000 new Chevrolet, Buick, GMC and Pontiac vehicles will be listed initially on the site.
California, which has been dominated by import brands over the past several years, is the most populous US state and the single largest market for new vehicles. Car sales have been hit harder in California than in other states over the past quarter because of the severity of the housing market slump there.
"It's a critical market for us and critical time for the company. Anything we can do to provide exposure to the products where we are underserved is clearly good news," GM US sales chief Mark LaNeve said on a conference call. "It's been incredibly hit by the recession. We think it really needs a shot in the arm," he said.
GM's market share in California is hovering in the 13 percent to 13.5 percent range, trailing its national average of 19.5 percent. GM, which lost $82 billion over the past four years, is trying to revamp its image and win back consumer trust after completing a bankruptcy restructuring steered by the Obama administration.
GM has lost market share for years to import brands led by Toyota Motor Corp, now No 2 in the US market with a 17 percent share. A recent J.D. Power & Associates study said more than 75 percent of new vehicle buyers in 2008 used the Internet during their shopping and research process, compared with 70 percent in 2007.
The decline in US auto sales to their lowest level in nearly three decades this year has hurt automakers, parts suppliers, dealers and virtually every company in the automotive sector, including eBay.
The online auction company's gross merchandise volume, a data point closely watched by analysts that measures the total value of goods sold on eBay, has been hit in recent years as the downturn in auto sales continued.
Agencies
Showing posts with label bankruptcy. Show all posts
Showing posts with label bankruptcy. Show all posts
Tuesday, August 11, 2009
Saturday, July 11, 2009
Will GM coninue to layoff another 4,000 jobs?
After a night spent signing mounds of paperwork authorizing the transfer of cash, real estate, technology and other property, GM attorneys are expected to officially usher the new General Motors out of bankruptcy protection on Friday and onto a path toward a hopefully profitable future.
Once the world's largest and most powerful automaker, the troubled company is expected to emerge cleansed of massive debt and burdensome contracts that would have sunk it without federal loans. Spurred on by the Obama administration's support, the process took just 40 days, even slightly quicker than crosstown rival Chrysler Group LLC's 42-day timeframe.
On Thursday, a bankruptcy court order allowing GM to sell most of its assets to a new company went into effect. The new GM, 61% owned by the US government, will face a brutally competitive global automotive market in the middle of the worst sales slump in a quarter-century.
At a press conference on Friday, CEO Fritz Henderson will announce that GM will cut another 4,000 white-collar jobs, including 450 top executives. The company still employs 88,000 people in the US and 235,000 worldwide.
Agencies
Once the world's largest and most powerful automaker, the troubled company is expected to emerge cleansed of massive debt and burdensome contracts that would have sunk it without federal loans. Spurred on by the Obama administration's support, the process took just 40 days, even slightly quicker than crosstown rival Chrysler Group LLC's 42-day timeframe.
On Thursday, a bankruptcy court order allowing GM to sell most of its assets to a new company went into effect. The new GM, 61% owned by the US government, will face a brutally competitive global automotive market in the middle of the worst sales slump in a quarter-century.
At a press conference on Friday, CEO Fritz Henderson will announce that GM will cut another 4,000 white-collar jobs, including 450 top executives. The company still employs 88,000 people in the US and 235,000 worldwide.
Agencies
Saturday, February 28, 2009
Is Silicon Valley on a reviving phase?
Martin Pichinson has never been busier. The co-owner of Sherwood Partners makes his living by helping the financial backers of start-up firms that file for bankruptcy and wind down their operations.
This year, he's helped shut down 30 firms -- more than the total number in 2008. "Business is booming. It's exploding," Pichinson said from his Silicon Valley offices. "It's sad," he added. Venture capitalists and market experts expect the pace of firms that shutdown in the tech industry to accelerate this year, potentially rivaling the dot-com crash, as funding dries up.
Mergers, acquisitions and IPOs are no longer a reliable exit strategy with capital markets tanking and buyers wary. So as in 2000, investors are now putting pressure on their invested firms, forcing them to cut back and save, or just cashing out and cutting their losses. Others say they are hunkering down and awaiting a turnaround and a resumption in deal and IPO activity in 12 to 18 months.
Paul Deninger, vice chairman of investment bank Jefferies & Co in Boston, reckons that about a 10th of the 500 to 1,000 start-ups his institution now tracks nationwide will fail. "The mergers and acquisitions market is firing on four out of eight cylinders," said Deninger, who runs a team that advises on deals. "Are we in a recession or depression? If 18 months from now we're in the same situation as today, then we have a much more serious problem."
To entice investment from a shrinking cash pool, startups now have to come up with fully realized business strategies. Next week, many of Silicon Valley's venture capitalists and chief executives gather near Palm Springs for Demo.Com, a conference showing off undeveloped new products and technology. But unlike in years past, organizers expect many products will be tied to fleshed out business plans and market strategies.
"Companies will present a solid business proposition with a clear path to revenues," promised Chris Shipley, Demo's producer. Last year, many of the start-ups there hoped to "collect a lot of customers and then figure out how to create business value around them. That's not working in the market today." Silicon Valley got a wake-up call in October, when a private slide-presentation put together by well-known VC Sequoia somehow got leaked onto the Internet.
Entitled "RIP Good Times", it forced an already-nervous industry to mull over declarations like "it is different this time," and "recovery will be long," and "spend every dollar as if it were your last." Venture capital funding tanked 71 per cent in the fourth quarter of 2008, but investment hasn't completely vanished. This week alone, Apparent Networks Inc of Massachusetts, which designs software to help firms access networks, raised $12 million from venture firms.
Aveksa Inc, which tailor-makes security software for corporations, secured $10 million. And private equity investor Good Energies invested $20 million in SAGE Electrochromics Inc, a 20 year-old firm that makes glass-coverings to cut heating and lighting costs. But investors are getting pickier, scrutinizing every firm as rigorously as they had in the bubble's aftermath.
Michael Kwatinetz of San Francisco's Azure Capital agreed that the era of "fluffy" investments was over -- not a bad thing if healthier and more fiscally responsible companies emerge. "Get your burn rate under control. Even the best companies are cutting their forward expense rate," Deninger advised.
Agencies
This year, he's helped shut down 30 firms -- more than the total number in 2008. "Business is booming. It's exploding," Pichinson said from his Silicon Valley offices. "It's sad," he added. Venture capitalists and market experts expect the pace of firms that shutdown in the tech industry to accelerate this year, potentially rivaling the dot-com crash, as funding dries up.
Mergers, acquisitions and IPOs are no longer a reliable exit strategy with capital markets tanking and buyers wary. So as in 2000, investors are now putting pressure on their invested firms, forcing them to cut back and save, or just cashing out and cutting their losses. Others say they are hunkering down and awaiting a turnaround and a resumption in deal and IPO activity in 12 to 18 months.
Paul Deninger, vice chairman of investment bank Jefferies & Co in Boston, reckons that about a 10th of the 500 to 1,000 start-ups his institution now tracks nationwide will fail. "The mergers and acquisitions market is firing on four out of eight cylinders," said Deninger, who runs a team that advises on deals. "Are we in a recession or depression? If 18 months from now we're in the same situation as today, then we have a much more serious problem."
To entice investment from a shrinking cash pool, startups now have to come up with fully realized business strategies. Next week, many of Silicon Valley's venture capitalists and chief executives gather near Palm Springs for Demo.Com, a conference showing off undeveloped new products and technology. But unlike in years past, organizers expect many products will be tied to fleshed out business plans and market strategies.
"Companies will present a solid business proposition with a clear path to revenues," promised Chris Shipley, Demo's producer. Last year, many of the start-ups there hoped to "collect a lot of customers and then figure out how to create business value around them. That's not working in the market today." Silicon Valley got a wake-up call in October, when a private slide-presentation put together by well-known VC Sequoia somehow got leaked onto the Internet.
Entitled "RIP Good Times", it forced an already-nervous industry to mull over declarations like "it is different this time," and "recovery will be long," and "spend every dollar as if it were your last." Venture capital funding tanked 71 per cent in the fourth quarter of 2008, but investment hasn't completely vanished. This week alone, Apparent Networks Inc of Massachusetts, which designs software to help firms access networks, raised $12 million from venture firms.
Aveksa Inc, which tailor-makes security software for corporations, secured $10 million. And private equity investor Good Energies invested $20 million in SAGE Electrochromics Inc, a 20 year-old firm that makes glass-coverings to cut heating and lighting costs. But investors are getting pickier, scrutinizing every firm as rigorously as they had in the bubble's aftermath.
Michael Kwatinetz of San Francisco's Azure Capital agreed that the era of "fluffy" investments was over -- not a bad thing if healthier and more fiscally responsible companies emerge. "Get your burn rate under control. Even the best companies are cutting their forward expense rate," Deninger advised.
Agencies
Saturday, December 20, 2008
Finally bailout approved: Automakers to get $17.4 bn
Citing danger to the national economy, the Bush administration approved an emergency bailout of the US auto industry on Friday, offering $17.4 billion in rescue loans in exchange for concessions from the deeply troubled carmakers and their workers.
The government will have the option of becoming a stockholder in the companies, much as it has with major banks, in effect partially nationalizing the industry.
At the same time, Treasury Secretary Henry Paulson said Congress should release the second $350 billion from the financial rescue fund that it approved in October to bail out huge financial institutions. Tapping the fund for the auto industry basically exhausts the first half of the $700 billion total, he said.
President Bush said, "Allowing the auto companies to collapse is not a responsible course of action." Bankruptcy, he said, would deal "an unacceptably painful blow to hardworking Americans" across the economy.
One official said $13.4 billion of the money would be available this month and next, $9.4 billion for General Motors Corp. and $4 billion for Chrysler LLC. Both companies have said they soon might be unable to pay their bills without federal help. Ford Motor Co. has said it does not need immediate help.
Bush's plan is designed to keep the auto industry running in the short term, passing the longer-range problem on to the incoming administration of President-elect Barack Obama.
Bush said the rescue package demanded concessions similar to those outlined in a bailout plan that was approved by the House but rejected by the Senate a week ago. It would give the automakers three months to come up with restructuring plans to become viable companies.
If they fail to produce a plan by March 31, the automakers will be required to repay the loans, which they would find very difficult.
"The time to make hard decisions to become viable is now, or the only option will be bankruptcy," Bush said. "The automakers and unions must understand what is at stake and make hard decisions necessary to reform."
He said the companies' workers should agree to wage and work rules that are competitive with foreign automakers by the end of next year.
And he called for elimination of a "jobs bank" program — negotiated by the United Auto Workers and the companies — under which laid-off workers receive unemployment benefits and supplemental pay from their companies for 48 weeks. If they remain laid off beyond that, they move to a jobs bank in which the company provides about 95% of their pay and benefits. Until the most recent contract, people could remain in the jobs bank for years. Early this month, the UAW agreed to suspend the program.
Under terms of the loan, GM and Chrysler must provide the government with stock warrants giving it the option to buy GM and Chrysler stock at a specific price.
In addition, the automakers would be required to agree to limits on executive pay and eliminate some perks such as corporate jets.
Paulson said that with the help for the carmakers, the government will have allocated the first half of the largest government bailout program in history.
He said he was confident that the Treasury Department, Federal Reserve and Federal Deposit Insurance Corp. have the resources to address a significant market crisis if one should occur before Congress approves the use of the second half of the rescue fund.
Paulson said he would discuss the process with congressional leaders and Obama's transition team "in the near future.
Source: Agencies
The government will have the option of becoming a stockholder in the companies, much as it has with major banks, in effect partially nationalizing the industry.
At the same time, Treasury Secretary Henry Paulson said Congress should release the second $350 billion from the financial rescue fund that it approved in October to bail out huge financial institutions. Tapping the fund for the auto industry basically exhausts the first half of the $700 billion total, he said.
President Bush said, "Allowing the auto companies to collapse is not a responsible course of action." Bankruptcy, he said, would deal "an unacceptably painful blow to hardworking Americans" across the economy.
One official said $13.4 billion of the money would be available this month and next, $9.4 billion for General Motors Corp. and $4 billion for Chrysler LLC. Both companies have said they soon might be unable to pay their bills without federal help. Ford Motor Co. has said it does not need immediate help.
Bush's plan is designed to keep the auto industry running in the short term, passing the longer-range problem on to the incoming administration of President-elect Barack Obama.
Bush said the rescue package demanded concessions similar to those outlined in a bailout plan that was approved by the House but rejected by the Senate a week ago. It would give the automakers three months to come up with restructuring plans to become viable companies.
If they fail to produce a plan by March 31, the automakers will be required to repay the loans, which they would find very difficult.
"The time to make hard decisions to become viable is now, or the only option will be bankruptcy," Bush said. "The automakers and unions must understand what is at stake and make hard decisions necessary to reform."
He said the companies' workers should agree to wage and work rules that are competitive with foreign automakers by the end of next year.
And he called for elimination of a "jobs bank" program — negotiated by the United Auto Workers and the companies — under which laid-off workers receive unemployment benefits and supplemental pay from their companies for 48 weeks. If they remain laid off beyond that, they move to a jobs bank in which the company provides about 95% of their pay and benefits. Until the most recent contract, people could remain in the jobs bank for years. Early this month, the UAW agreed to suspend the program.
Under terms of the loan, GM and Chrysler must provide the government with stock warrants giving it the option to buy GM and Chrysler stock at a specific price.
In addition, the automakers would be required to agree to limits on executive pay and eliminate some perks such as corporate jets.
Paulson said that with the help for the carmakers, the government will have allocated the first half of the largest government bailout program in history.
He said he was confident that the Treasury Department, Federal Reserve and Federal Deposit Insurance Corp. have the resources to address a significant market crisis if one should occur before Congress approves the use of the second half of the rescue fund.
Paulson said he would discuss the process with congressional leaders and Obama's transition team "in the near future.
Source: Agencies
Saturday, November 22, 2008
U.S. Government may rescue Citigroup
The U.S. government may step in to rescue Citigroup Inc. after a crisis in confidence erased half the bank’s stock-market value in three days, according to investors and analysts.
Citigroup’s $2 trillion of assets dwarfs companies such as American International Group Inc. that got support from the U.S. government this year. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke may favor a rescue to avoid the chaotic aftermath of Lehman Brothers Holdings Inc.’s bankruptcy in September.
“Citi is in the category of ‘too big to fail,’” said Michael Holland, chairman and founder of Holland & Co. in New York, which oversees $4 billion. “There is a commitment from this administration and the next to do what it takes to save Citi.”
One option is for the Federal Reserve and U.S. Treasury to create a special vehicle to purchase bad assets from Citi. The Fed has already erected several such funds, such as the Commercial Paper Funding Facility, to provide liquidity to the financial system. Typically, the Treasury would provide some first-loss equity or insurance fee, such as $50 billion provided to the CPFF, to protect the central bank and give the fiscal authority a stake.
The arrangement allows the Fed to leverage the money provided by the Treasury with loans, enabling the purchase of assets worth a multiple of the money. Funding the purchases with loans makes them less onerous to the U.S. budget.
To read more...click on the link below
http://www.bloomberg.com/apps/news?pid=20601087&sid=acxKsnU5HOAI&refer=home
Citigroup’s $2 trillion of assets dwarfs companies such as American International Group Inc. that got support from the U.S. government this year. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke may favor a rescue to avoid the chaotic aftermath of Lehman Brothers Holdings Inc.’s bankruptcy in September.
“Citi is in the category of ‘too big to fail,’” said Michael Holland, chairman and founder of Holland & Co. in New York, which oversees $4 billion. “There is a commitment from this administration and the next to do what it takes to save Citi.”
One option is for the Federal Reserve and U.S. Treasury to create a special vehicle to purchase bad assets from Citi. The Fed has already erected several such funds, such as the Commercial Paper Funding Facility, to provide liquidity to the financial system. Typically, the Treasury would provide some first-loss equity or insurance fee, such as $50 billion provided to the CPFF, to protect the central bank and give the fiscal authority a stake.
The arrangement allows the Fed to leverage the money provided by the Treasury with loans, enabling the purchase of assets worth a multiple of the money. Funding the purchases with loans makes them less onerous to the U.S. budget.
To read more...click on the link below
http://www.bloomberg.com/apps/news?pid=20601087&sid=acxKsnU5HOAI&refer=home
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