Yesterday, Jerry York (Kirk Kerkorian's bobo), weighed in on GM's woes during the Detroit Auto Show. Specifically he highlighted GM's needs to cut their dividend in half, slice executive pay and dump Hummer and Volvo.
According to Mr. York this is only the beginning of what GM needs to do but it would be a good start. And, he coyly promised that Mr. Kerkorian would consider purchasing 24MM GM share to help drive up the price and instill investor confidence.
Kerkorian has been a thorn in GM's side since he ponied up for millions of shares this past Summer. Maybe because he's approaching his 300th birthday (I kid, he's actually 89) or maybe it is because he wants to ruin a second member of the Big 3 (read, Taken for a Ride, the tome that traced Chrysler's spin out into the arms of Daimler Benz, aided by Kerkorian). Regardless, Kerkorian has a motive. And a good one at that, he wants to see the shares rise because he owns a boatload of them. But his move to suggest cutting the dividend is pure genius. By doing this he is putting himself out there that the biggest GM shareholder would rather sacrifice the sureness of a dividend for the potential of long term benefit (not bad for an 89 year old). The questions is will GM bite and will it help?
Hawk's View: Tough spot for Ric Waggoner and frieds. They could use a share boost. However, if they follow any of Kerkorian's public comments they could be seen as even more weak than they already appear. Cutting the dividend in half would no doubt lead to a sell off from angry shareholders who rely on the dividend for income. Mr. Kerkorian's share purchase may do little to offset the sell off. In the end, look for GM to continue with their own plan to right the ship and for this soap opera with Kerkorian to continue.
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