HIDDEN VALUE

Dear Value Seeker,

Welcome to the 100th edition of Hidden Value.

The financial world was a far more tranquil place when we started this daily newsletter on July 25. But we knew a storm was brewing…

“Automakers bailout falls apart in Senate” reads a Marketwatch headline today.

Republican Senators blocked the passage of a $14 billion loan to Detroit ‘bad boys’ GM and Chrysler. A refusal of the United Auto Workers, headed by Ron Gettelfinger, to agree to lower wages and benefits by a certain point in 2009 was reportedly the key sticking point.

“Bankruptcy is the best possible result. I am sick and tired of taxpayer money funding corporate ineptitude,” says Mike Shedlock on his Global Economic Analysis blog. “Nonetheless I am fearful that [President] Bush and [House Speaker Nancy] Pelosi will try one more time to revive the dead.”

...

The U.S. “Big Three” of General Motors Corp. (GM), Ford Motor Co. (F), and Chrysler Corp. submitted their turnaround plans to Congress yesterday (Tuesday), hoping for approval of a massive loan package they say is central to their survival.

And while the plans include such politically palatable moves as salary cuts for top-tier executives, the sale of cushy corporate jets and the elimination of moribund brands, the three embattled U.S. automakers are also now seeking government aid of as much as $34 billion – which is as much as $9 billion more than the $25 billion figure that’s been on the table from the very beginning of the industry’s bid for bailout money.

Here’s the breakdown:

General Motors, the largest domestic automaker, said late yesterday that it is seeking as much as $18 billion to survive into 2010 – and that it needs $4 billion of that ...

Two days before the chief executives of Detroit’s Big Three – General Motors Corp. (GM), Ford Motor Co. (F), and Chrysler Corp. – march back to Capitol Hill to again petition Congress for a $25 billion bailout, details about each company’s plan to scale back operations are emerging.

Each CEO – GM’s Richard Wagoner, Ford Chief Executive Alan Mulally and Chrysler’s Robert “Bob” Nardelli – left Washington D.C. two weeks ago scolded, and with a clear understanding that the government is expecting each company to shed costs and present forward-looking plans that prove taxpayer money will not be wasted.

Wagoner has been fuzzy on the company’s goal to cut at least $15 billion in costs, but few options have been ruled out.

GM could further reduce its North American workforce. It could eliminate and/or sell one or more of its brands. The primary name on the table is

...

Shares of Ford Motor Co. (F) and General Motors Corp. (GM) posted gains yesterday (Tuesday) on speculation that consolidation in the U.S. domestic auto industry could be the struggling sector’s saving grace.Over the last three trading sessions, Ford shares are up almost 18%, while GM shares are up over 37% on reports of possible merger talks and asset sales.

Shares of Ford Motor Co. (F) and General Motors Corp. (GM) posted gains yesterday (Tuesday) on speculation that consolidation in the U.S. domestic auto industry could be the struggling sector’s saving grace.Over the last three trading sessions, Ford shares are up almost 18%, while GM shares are up over 37% on reports of possible merger talks and asset sales.