By Kate Gibson
As Ford Motor Co. prepares to report what's expected to be its
biggest first-quarter loss in more than 15 years, the drama
surrounding car companies continues, with stock analysts debating
the merits of a bankruptcy by General Motors Corp. and whether the
government should be helping Chrysler.
On Thursday, Ford (F) shares advanced for a second straight day
after Goldman Sachs advised investors to purchase its shares before
industry changes that Goldman predicts will benefit the nation's
second-largest automobile maker.
Ford, which posted a record loss of $14.7 billion last year, is
the only big U.S. automaker that's managed to continue without help
from the government. The Dearborn, Mich.-based company is slated to
report its first-quarter numbers on Friday.
General Motors (GM) was among the components weighing on the Dow
Jones Industrial Average (DJI) on Thursday, its shares lately off
3.7%.
The Dow fell 53.92 points to 7,832.65, the S&P 500 Index
(SPX) shed 5.06 points to 838.49, while the Nasdaq Composite (RIXF)
declined 14.06 points to 1,632.06.
GM's CEO last week said the nation's biggest carmaker would file
for bankruptcy protection unless it finds a means of restructuring
debt by June 1, while Chrysler has until the end of the month to
ink a deal with Fiat to avoid bankruptcy.
Nick Kalvas, equity analyst at MF Global Research, believes
bankruptcy could be positive for GM.
"Chapter 11 is not the end of the world for GM's operation.
Given the political climate, many will cheer a bankruptcy," the
analyst said.
Chrysler's troubles were well known when the company was
purchased nearly two years ago by private investment firm Cerberus
Capital Management, contends Dan Greenhaus, an analyst at Miller
Tabak & Co. He argues that there is "no systemic threat
whatsoever from a Chrysler bankruptcy or liquidation."
"It appears Treasury is willing to increase its offer to repay
Chrysler senior lenders. I fail to see why the government should be
providing any assistance whatsoever to Chrysler," said
Greenhaus.
"We're never going to get efficient and profitable car companies
in this country if we prop up the weakest and least efficient,"
said Greenhaus.
As for GM, Greenhaus does not believe the government should be
supporting it either, but concedes "an argument can be made to help
GM get through this time."