General Motors has filed its long awaited public offering, and will sell common and preferred stock to the public, as the company attempts a second chance at life. Although the company is in much better financial condition, the bigger question is the company's product lineup for consumers for the next few years.
IN PICTURES: Baby Buffett Portfolio: His 6 Best Long-Term Picks

The Shareholders
General Motors filed for bankruptcy in 2009, and was bailed out by the government, which ended up owning a major part of the company. The four largest shareholders of General Motors prior to the offerings are:

  • U.S Treasury - 60.8%
  • United Auto Workers Retiree Medical Trust - 19.9%
  • Canadian Government - 11.7%
  • Motors Liquidation Company - 23.9%

Motors Liquidation Company is the name for the old General Motors entity. Also, the numbers don't round to 100% because the total assumes the full exercise of warrants by several of the shareholders on the list.

General Motors is issuing common and preferred stock in a concurrent offering. The company will receive no proceeds of either offering because selling shareholders, including the U.S. Treasury, are offering its shares to the public.

The Company
The new General Motors is but a shadow of its old self. In 2009, the company sold 7.5 million vehicles worldwide, giving the company an 11.6% share of total global sales.

General Motors has reduced its cost structure through the painful bankruptcy process, and estimates that 43% of its vehicles are manufactured in areas with labor costs that average $15 per hour.

Balance Sheet
The new General Motors has $31.5 billion in cash, cash equivalents and marketable securities on its balance sheet as of 6/30/2010.

This compares favorably to Ford Motor (NYSE:F), the company's main domestic competitor. Ford Motor reported cash, cash equivalents and marketable securities of close to $40 billion as of 6/30/2010.

This cash balance even rivals some high growth technology companies like Microsoft (NYES:MSFT) and Apple Computer (NYSE:AAPL), which ended the second quarter of 2010 with cash, cash equivalents and short term marketable securities of $36.7 billion and $24.2 billion, respectively.

Total balance sheet debt for General Motors stands at $8.2 billion, which is a large reduction from what the company owed prior to bankruptcy. The company boasts in its prospectus that the company's debt levels fell by $92.7 billion relative to the old General Motors.

The Bottom Line
The new General Motors appears to be much different than its predecessor with a lower cost structure and free of most of the huge debt load carried prior to bankruptcy. The company must now produce the type of vehicles that buyers want at a price that they can afford. (For related reading, take a look at The Murky Waters Of The IPO Market.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Investing

    Retirees: 7 Lessons from 2008 for the Next Crisis

    When the last big market crisis hit, many retirees ran to the sidelines. Next time, there are better ways to manage your portfolio.
  2. Economics

    The 2007-08 Financial Crisis In Review

    Subprime lenders began filing for bankruptcy in 2007 -- more than 25 during February and March, alone.
  3. Economics

    Industries That Thrive On Recession

    Recessions are not equally hard on everyone. In fact, there are some industries that even flourish amid the adversity.
  4. Fundamental Analysis

    5 Must-Have Metrics For Value Investors

    Focusing on certain fundamental metrics is the best way for value investors to cash in gains. Here are the most important metrics to know.
  5. Stock Analysis

    Analyzing Altria's Return on Equity (ROE) (MO)

    Learn about Altria Group's return on equity (ROE) and analyze net profit margin, asset turnover and financial leverage to determine what is causing its high ROE.
  6. Fundamental Analysis

    Is a U.S. Industrial Recession on the Horizon in 2016?

    Find out why the industrial economy may be teetering on an industrial recession and what could prevent it from going over the cliff.
  7. Stock Analysis

    6 Risks International Stocks Face in 2016

    Learn about risk factors that can influence your investment in foreign stocks and funds, and what regions are more at-risk than others.
  8. Investing News

    Icahn's Bet on Cheniere Energy: Should You Follow?

    Investing legend Carl Icahn continues to lose money on Cheniere Energy, but he's increasing his stake. Should you follow his lead?
  9. Stock Analysis

    Analyzing Google's Return on Equity (ROE) (GOOGL)

    Learn about Alphabet's return on equity. How has its ROE changed over time, how does it compare to its peers and what factors are driving ROE for the company?
  10. Investing News

    Is Buffett's Bet on Oil Right for You? (XOM, PSX)

    Oil stocks are getting trounced, but Warren Buffett still likes one of them. Should you follow the leader?
RELATED FAQS
  1. What is the formula for calculating EBITDA?

    When analyzing financial fitness, corporate accountants and investors alike closely examine a company's financial statements ... Read Full Answer >>
  2. How do I calculate the P/E ratio of a company?

    The price-earnings ratio (P/E ratio) is a valuation measure that compares the level of stock prices to the level of corporate ... Read Full Answer >>
  3. How do you calculate return on equity (ROE)?

    Return on equity (ROE) is a ratio that provides investors insight into how efficiently a company (or more specifically, its ... Read Full Answer >>
  4. How do you calculate working capital?

    Working capital represents the difference between a firm’s current assets and current liabilities. The challenge can be determining ... Read Full Answer >>
  5. What is the formula for calculating the current ratio?

    The current ratio is a financial ratio that investors and analysts use to examine the liquidity of a company and its ability ... Read Full Answer >>
  6. What is the formula for calculating earnings per share (EPS)?

    Earnings per share (EPS) is the portion of a company’s profit that is allocated to each outstanding share of common stock, ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center