GM stock spirals after analyst sets target price as zero
WASHINGTON -- "Even if GM is able to secure immediate U.S. government support, we believe that GM's predicament has the potential to set in motion a sequence of events that would be bankruptcy-like," said Deutsche Bank analyst Rod Lache, who lowered his rating on GM shares to "sell" from "hold."
GM shares were down more than 20% in afternoon trading.
GM spokeswoman Renee Rashid-Merem declined to comment on Lache's note but said GM is focused on a number of cost cutting initiatives it outlined on Friday when it reported third-quarter earnings.
"We've implemented a lot of activities that are more than $20 billion in savings by the end of 2009, and we are going to remain focused on those initiatives internally, and at the same time we have approached the government for potential funding."
GM executives said Friday that securing government aid is their top priority. The automaker, its Detroit competitors and the UAW have asked Congress to help provide a $25 billion loan to automakers and another $25 billion loan to the UAW's trust fund for retiree health care.
Congressional Democrats called on the Bush administration this weekend to use a portion of the $700 billion financial industry bailout administered by the Treasury Department to aid automakers. The administration has said the only tool it has to help the industry is the $25 billion in loans for fuel-efficient vehicles, which will be dispersed over several months.
The Treasury Department hasn't officially responded to the letter from House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid, but White House spokeswoman Dana Perino said Monday that the administration did not see how automakers could fit under the program.
Saving financial markets "is what Congress had in mind when it passed that rescue package," Perino said. "There was not discussion of specific help to auto companies during that debate, and so Congress' intent was to help financial institutions."
