Here’s a column I posted at globeandmail.com about Delphi filing for bankruptcy:
“To the ancient Greeks, Delphi was the place where the high priestess of Apollo would foretell the future in return for the right number of gold pieces. General Motors just got a glimpse of its future from something called Delphi too, but this one isn’t an oracle — it’s a bankrupt auto-parts company that GM spun off a few years ago, one that has continued to be a millstone around the neck of the giant company. And this particular Delphi is going to cost General Motors a lot more than a few gold pieces and some incense. In the worst-case scenario laid out by some industry analysts, Delphi’s woes could force the car-maker to file for bankruptcy protection.
Those concerns pushed shares of GM down by almost 11 per cent on Monday, on huge volume, to a new 52-week low. Although the stock rebounded somewhat on Tuesday, it is still down almost 40 per cent from the peak of $42.22 (U.S.) it hit in late July, and is more than 50 per cent lower than it was in January of last year. The car-maker has lost about $15-billion in market value in less than two years, and — in a striking illustration of the market’s perception of this giant company — GM’s market capitalization of a little over $14-billion is now less than 10 per cent of the company’s annual revenue of $190-billion, and also less than the amount of cash GM has on hand, which amounts to about $16-billion. Continue reading “Column: Delphi goes bust”