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. Stock Analysis

    How Toyota Succeeds at Home and Abroad (TM)

    Japan's biggest car manufacturer is also one of North America's biggest, delighting shareholders with its high profit margins.
  2. Stock Analysis

    Analyzing Microsoft's Return on Equity (ROE) (MSFT)

    Discover a detailed analysis of Microsoft's historical return on equity, and learn how its ROE stacks up to its competitors in the tech industry.
  3. Stock Analysis

    Starbucks: Profiting One Cup at a Time (SBUX)

    Starbucks is everywhere. But is it a worthwhile business? Ask the shareholders who've made it one of the world's most successful companies.
  4. Stock Analysis

    How Medtronic Makes Money (MDT)

    Here's the story of an American medical device firm that covers almost every segment in medicine and recently moved to Ireland to pay less in taxes.
  5. Investing News

    Latest Labor Numbers: Good News for the Market?

    Some economic numbers are indicating that the labor market is outperforming the stock market. Should investors be bullish?
  6. Investing News

    Stocks with Big Dividend Yields: 'It's a Trap!'

    Should you seek high yielding-dividend stocks in the current investment environment?
  7. Investing News

    Should You Be Betting with Buffett Right Now?

    Following Warren Buffett's stock picks has historically been a good strategy. Is considering his biggest holdings in 2016 a good idea?
  8. Investing News

    Is the White House too Optimistic on the Economy?

    Are the White House's economic growth projections for 2016 and 2017 realistic or too optimistic?
  9. Products and Investments

    Cash vs. Stocks: How to Decide Which is Best

    Is it better to keep your money in cash or is a down market a good time to buy stocks at a lower cost?
  10. Investing News

    Who Does Cheap Oil Benefit? See This Stock (DG)

    Cheap oil won't benefit most companies, but this retailer might buck that trend.
RELATED FAQS
  1. When does a growth stock turn into a value opportunity?

    A growth stock turns into a value opportunity when it trades at a reasonable multiple of the company's earnings per share ... Read Full Answer >>
  2. 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 >>
  3. 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 >>
  4. 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 >>
  5. 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 >>
  6. 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 >>
COMPANIES IN THIS ARTICLE
Trading Center