GM sees profit rising, boosts stock buyback by $5B

GM CEO Mary Barra. This frustration has now come to a head, with activist investor David Einhorn demanding GM consider a very unorthodox idea. Einhorn is proposing that GM split its stock into two classes — one that pays a dividend to investors who would like that, and another that would somehow track growth in the business. Einhorn made a point of saying he doesn't want "operational" changes at GM, but the company is dealing with the most widespread disruption of the car business in a century and has its plate full bringing electric cars to market, continuing to refresh its trucks and SUVs, and facing down new competitors.

Barra has acceded to the demands of an activist before. Init was Harry Wilson and all he wanted was a higher dividend and more aggressive stock buyback.

The problem for Barra is that this didn't really work. The shares are basically flat over the past five years, even after enjoying a run during the "Trump bump.

So, Einhorn's big idea is to segregate GM investors into two categories. Under his proposal, dividend investors would get their yield and growth investors could buy the new class of stock.

The most obvious rebuttal to this is that the management priorities for each class of stock could come into conflict, raising governance issues and liabilities for management. GM isn't just blowing Einhorn off, mind you.

But Barra also has far more practical considerations to consider right now. Like the entire US auto industry, GM is facing the inevitable slowdown in sales that is going to come after back-to-back years of gm wants to buy back stock sales.

Additionally, the entire industry is under stress from the arrival of ride-hailing services such as Uber and Lyft. GM and other automakers have stepped up the pace of investment in mobility services and self-driving cars, and in some cases have acquired transportation startups outright.

David Einhorn plays poker and likes more than one flavor of ice cream. A downturn is inevitable, and GM's entire management team — perhaps its best ever — has all been through bad times before.

Although Barra her team have remained optimistic about US sales, they're aware list binary option with a minimum deposit sales are at an elevated historic level and that a decline could take hold before the end of For several years, Barra has been focused on maximizing return on invested capital and doesn't want to see the company's ability to finance its business through a slump undermined.

The last time GM couldn't borrow money in the face of a plunging US market, it led to government bailouts and a Chapter 11 bankruptcy filing. GM has said that it can break even in a US market where sales fall to as little as 10 million to 11 million cars annually — a cataclysmic decline from current levels of over 17 million. But its most critical objection to the Greenlight proposal is the restrictions asian stock market indices live will limit the company's financial flexibility in the event a downturn hukum forex. GM executives have been stressing that to break out of this flatline performance, the company needs to excel vba function argument default value investors that its can deliver steady growth.

It's thus far done that, but investors skittishness about a sales peak isn't going away, and investors such as Einhorn are chaffing against a buyback program that isn't moving the needle.

Driving The Heartland Since | Lake GM Auto Center in Devils Lake, ND | New Rockford & North Dakota

But as GM points out, it's unclear that anyone would want to buy the new class of "growth" stock. So the company would immediately be saddled with managing investors expectations for a fixed-dividend class of shares alongside shares that would be under intense quarter-by-quarter scrutiny. If you don't see trouble ahead then maybe the risks GM is flagging are less of a concern to you.

Auto sales in the US have been booming. Why big data can make HR more important. You are using an outdated version of Internet Explorer.

General Motors Stock Repurchase Program | nocuwahojopyx.web.fc2.com

For security reasons you should upgrade your browser. Please go to Windows Updates and install the latest version. Trending Tech Finance Politics Strategy Lifestyle Sports Video All. You have successfully emailed the post.

David Einhorn's terrible idea could not have come at a worse time for GM. Markets Insider Two flavors of ice cream Barra has acceded to the demands of an activist before.

Getty Images Entertainment "Highly speculative" A downturn is inevitable, and GM's entire management team — perhaps its best ever — has all been through bad times before. Business Insider NOW WATCH: Chevy's 'Tesla-killer' has some sweet features.

BITranspo General Motors Greenlight Capital David Einhorn Auto Industry Activist Investing MarketsOpEd. Recommended For You Powered by Sailthru. Featured Why big data can make HR more important.

Thanks to our partners. Registration on or use of this site constitutes acceptance of our Terms of ServicePrivacy Policyand Cookie Policy. Stock quotes by finanzen.