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No. of Recommendations: 2
The problem with GM is not only the Pension accounting issue about which we have been hearing.

Other problems include the fact that they are giving the things away in order to move inventory. Just last week on the way to my office I heard a radio commercial by a local dealer proclaiming that Detroit is in trouble and need you to bail them out... "too much inventory..." We all know the dubious tactics of auto-dealers but this is one I haven't heard in years and this dealer was actually saying the manufacturers are in trouble. There could be an element of truth to that based upon the expansion of ZERO percent financing.

The way that cars have been selling the past few years, it simply can't go on forever. We're not talking pancakes here. People only need so many cars. Anyone who believes the optimistic pabulum of the manufacturers is very naive. Are they as good and OPTIMISTIC at projecting future auto sales as they are at projecting future returns on their pension plans?.

The last major concern I have is that they are making too many sub-par loans to people who are much more likely to default, especially in this economy as people get their pink slips. It's much harder to make a car payment on a car with an unemployment check. They make these loans to "undesirables" in my opinion, in order to delay the inevitable. The pressure is strong to keep moving cars, especiially with the heat on them regarding possible pension shortfalls.

I think this will be the next big controversy. I can see the useless blowhards at CNBC a year from now doing another special on this one. Remember, you heard it here first. It was what I had envisioned back when AOL first offered to steal time Warner before the merger went through. Now those cretins are patting themselves on the back 2 years later because they finally figured it out in hindsight. I've been bitter ever since they started pumping that academic bull %&^#! they cal "The Heist" or whatever they called it
AOL: Tuesday, December 5, 2000
Closing Price: 44.08

MrArbitrage 12/5/00 (Then 4Commonsense)
This deal was a bamboozlement of TWX shareholders from the beginning. It is the equiv. of agreeing to sell the company for Russian Rubles. These execs must be insane. On one hand, you have a media conglomerate packed with real, tangible assets that are in many cases American institutions. On the other hand, you have a company that nobody ever heard of until about 1994, a company that really has no diversification, a company that is in a business with no barrier to entry. Sure, AOL has millions of people who use their service, but where's the profit? TWX can go buy a CD ROM with millions of people on it for $99.00. It would be a much better deal for them than to give away their company for an inflated currency which has been propped up by the fantasies of ignorant "investors" who have never experienced a market crash.
AOL is a glorified magazine. It has a nice number of readers but it doesn't warrant a premium of 80x earnings. Even more ridiculous is the fact that AOL was @ about 400-500x earnings when the suckers at TWX agreed to be taken by this.
You can't blame Steve Case & Co. for trying. It's a great deal for them. It's a way for them to actually lock in some great value to their stock. If they can get a sucker to accept their "bubble currency" at face value, why not? If at all, TWX should have purchased AOL @ a fraction of the then current market price. It still would have been a great deal for AOL. It is hollow money.
AOL at If they were prudent, this would have been a "Take Under" from the beginning.

http://boards.fool.com/Message.asp?mid=13840483


MrArbitrage on AOL 12/7/00 Levin should be ousted for falling prey to this speculative bubble, and if anything, TWX should make a hostile bid for AOL. Popularity and a high subscriber rate is not comparable to the intrinsic value contained within TWX.

History will prove that this speculative period was one in which even the elite threw in the proverbial towel and abandoned common sense, as was the case in 17th century Holland with the "tulip bulb craze", as was the case with the vending machine craze in the 1960's...


http://boards.fool.com/Message.asp?mid=13855131 (actual post link)

AOL: Thursday, December 7, 2000
Closing Price: $43.55




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