From ClusterStock, Dec. 1, 2008:

You would think that having a survival plan would be the first order of business for most management teams, but apparently not GM's. Only now that it has been provisionally stiffed by the US taxpayer and ordered to come up with such a plan is GM finally assembling one.

WSJ: General Motors Corp. management on Sunday was racing to finalize a viability plan to take to Congress, with a boardroom hellbent on securing a federal rescue loan.

At the same time, directors -- unlike chief executive Rick Wagoner -- are also insisting that all options stay on the table, including a Chapter 11 bankruptcy filing, if a bailout doesn't come through...

In recent days, dealers, union officials, and other key constituents have traveled to the company's headquarters in Detroit to help management find new ways to cut costs, people involved in the meetings said. (Please see related article.)

"Everything is on the table," according to one person familiar with the board's thinking. Following Mr. Wagoner's poor performance in Washington last month, the board began meeting more and taking more seriously its obligation to investigate other options.

Mr. Wagoner has said that a filing for Chapter 11 bankruptcy protection isn't a viable option, insisting the auto maker would collapse because consumers won't buy from a car from a company in bankruptcy and obtaining financing would be nearly impossible.

See Also: GM May Dump Pontiac, Saturn, Saab

From ClusterStock:

It wasn't anything to scream and yell about, but retail sales on Black Friday appear to have been better than expected, including eCommerce.

Retail sales jumped 3% year over year, according to one research firm (some have expected holiday sales to drop 10% year over year). eCommerce, meanwhile, which is down 4% versus last year so far, rose a surprising 1%.  Sales today (Cyber Monday) will likely be the big bellwether for eCommerce.

AP and comScore reports after the jump.

Can't believe how much money you've lost in the past couple of months? Neither can we.  But we're pleased to say that our misery has some serious company.

As Aaron and I discuss in the accompanying video, The Business Sheet has compiled a list of 20 global moguls who have gotten creamed in the recent economic collapse: Bill Gates, loser. Sumner Redstone, loser. Kirk Kerkorian, loser. Sergey Brin and Larry Page, losers. And those folks have lost hardly anything next to the biggest loser of all.

Click here to start The Biggest Losers slideshow. Use the "Next >" button at the top right of each page to advance.

(Disclaimer: This is not a scientifically ranked list of the world's 20 biggest losers. But these 20 guys have lost a hell of a lot.)

From ClusterStock, Nov. 26, 2008:

The latest Trash Asset Removal Plan, the $800 billion one the government announced yesterday, is actually making a difference, at least so far.

One of the goals of the plan is to reduce mortgage rates through government buying of mortgage-backed securities and Fannie and Freddie debt. And it worked immediately. Yesterday saw the biggest mortgage refinancing activity in a year. 

If this trend continues, it will allow some homeowners to get out from under onerous adjustable rate mortgages and into cheaper fixed-rate ones--possibly even ones they can afford (at least until they get laid off). This, in turn, will free up some debt-service payments to be used on other things.

The bailout won't solve the whole problem, obviously: consumers are still struggling under a massive debt load, and those who are already underwater on their houses won't be able to refinance.  But it's a small step in the right direction.

WSJ: The Federal Reserve's attempt to stabilize the housing market set off a chain reaction across the U.S. on Tuesday, dropping interest rates and quickly spurring a burst of refinancing activity by borrowers eager to lower their mortgage costs.

Some brokers said it was the most activity they've seen in at least one year, although there was no way to determine to volume of refinancing...

Rates on 30-year fixed-rate mortgages dropped by roughly half a percentage point to about 5.5%, for borrowers with good credit scores and substantial equity in their homes, say mortgage brokers and lenders.

While the initial flurry of calls came from people seeking to refinance, economists predicted lower rates also will spur some home buying among bargain-seekers. The surge in refinancing will help the overall economy by putting more cash in consumers' pockets and reducing the pressure on some borrowers struggling to make payments...

The government's latest plans won't fix all the problems bedeviling the housing and credit markets. And it's not clear whether the most recent initiative will keep mortgage interest rates down over the long run.

Mortgage rates had dipped briefly in past weeks following previous government actions, including the takeover of Fannie Mae and Freddie Mac. But then rates creeped upward.

Tuesday's lower rates will for now only benefit borrowers who have the cash and credit rating to qualify for mortgages under current lending standards. The Fed's actions won't make mortgages any easier to get for homeowners or buyers who haven't been able to qualify in recent weeks.

Lower rates also won't help the roughly 11.8 million borrowers who are unable to refinance because they owe more than their home is worth, said Mark Zandi, chief economist of Moody's Economy.com.

See Also: Hey, This New Bailout Plan Is Actually Smart

UPDATE: Google shares rallying Tuesday after recent declines. New data shows Google’s dominance in search grew further in October. Reports AP: “Google held a 63.1 percent share of the U.S. search market through October, up from 58.5 percent in the previous year, according to comScore. Yahoo ranked a distant second at 20.5 percent, down from 22.9 percent a year ago, while Microsoft's share stood at 8.5 percent versus 9.7 percent in October 2007. Nielsen Online pegged Google's October search share at 61.2 percent followed by Yahoo at 16.9 percent and Microsoft at 11.4 percent.”

Also, the Wall Street Journal reports that Google plans to significantly reduce the number of contract workers it uses, but has no plans to lay off employees.

Original post:

From Silicon Alley Insider, Nov. 25, 2008:

While Google's market capitalization tanks and the company launches its first wave of cost-cutting, CEO Eric Schmidt is devoting much of his public-speaking time to pressing for green-energy stimulus plans and discussing the auto industry bailout. Technology, Media & Telecom Analyst speculates that this is because he is getting ready to take a position in the Obama Administration.

We have no inside knowledge here.

We would, however, note that, having grown Google to $20 billion in revenue over seven years, Eric has certainly earned the right to take a break. We would also note that there are many other reasons why this might be a good time to exit stage left (although a year ago, when the stock was at $700, would have been a much better time). To wit: 

• He might be getting bored.
• He might be deciding that taking Google from $20 billion to $50 billion will be a much different job (and less fun) than taking it from $0 to $20 billion.
• He might be observing that the search product cycle is ending and Google has not yet found another product to drive the next wave of growth, which also might be less fun (especially if the company has to start firing people).
• Like Sergey and Larry, he might just be interested in doing something else — such as going into politics or solving the world's energy crisis.

From ClusterStock, Nov. 21, 2008:

Update: Shares of Citigroup taking another hit Friday morning, down below $3 a share.

Also, CNBC's Charlie Gasparino is reporting that Citi CEO Vikram Pandit said in a morning conference call that the company will not sell Smith Barney. According to Gasparino, Pandit said, "Rumor mongering is at the heart of our problems," and he reiterated that Citigroup's capital position is very strong.

Original post:

It took long enough.

In the past week, Citigroup's stock has fallen 50%. During this rout, the company has remained silent: No leaks, no statements, no trial balloons, no nothing. Given that the latest collapse followed a CEO "town hall" designed to give Wall Street some of what it wanted (more cost cuts) and buck up employees (didn't work), the firm apparently figured that silence was golden. Unfortunately, it just made them look asleep.

In any event... Last night, Citi floated several trial balloons into the press:

• It might sell the company
• It might sell pieces of the company
• It won't do either of these things
• The board will have an emergency meeting about the stock price today

The WSJ got the leak about Citi possibly selling pieces of the company or the whole thing. The Times got the leak that this wasn't true. (Citi has a pet project going to discredit the WSJ after the paper said the firm was considering dumping Chairman Win Bisschof, which Citi violently denied. Perhaps the simultaneous leaked info and denials were designed to do this). Both papers got the story about the emergency board meeting today.

The purpose of the "might sell the company" leak, obviously, is to create hope for a takeover premium, which could briefly stop the stock plunge (the stock is up in pre-market). The purpose of the board meeting, meanwhile, is to decide what the company can actually do to stop the stock price from plunging. Unfortunately, the answer is probably "nothing."

Citi's common stock is now worth less than the government pumped into the company last month. (On the bright side, if the government hadn't pumped in the money, it would now be worth zero). The company's tangible book to equity ratio is now more than 50-to-1, and the firm's gigantic mountain of consumer debt "assets" will almost certainly face enough writedowns in the next several quarters to wipe out the equity that's left. (Tangible book value excludes intangible assets and excludes preferred stock: It shows how levered the common equity is).

The company could raise new common equity--another $25 billion, say. That would dilute the common stock by half, but that's better than turning it into a bagel. There would be only one buyer who could come up with $25 billion, though--the U.S. government. And Hank Paulson probably won't take over Citi unless/until he has to.

The company could try to sell pieces of itself, but this will likely take time. The company could merge with Morgan Stanley or Goldman Sachs, but those firms are sinking fast, too. It could try to sell itself to a massive international bank, but it's not obvious why this hypothetical international buyer would pay much for the common stock.

Whatever happens, Citigroup won't declare bankruptcy.  Before that happens, Hank Paulson will take it over, just as he did Fannie and Freddie.  He will then chop it up and start selling off the pieces to try to recoup some of the $2 trillion that taxpayers will be on the hook for. 

Citi's debtholders will probably be kept whole in that scenario (Hank won't risk another Lehman). Citi's preferred shareholders will probably get hit but not vaporized. Citi's common shareholders, meanwhile, will probably get wiped out.

See Also:
Citi: Where't the Panic?
Citi's Balance Sheet: Friday the 13th, Part XVII

From ClusterStock, Nov. 20, 2008:

GE is talking to several sovereign wealth funds about becoming investors. Not clear from story below whether company would issue more stock (dilute current shareholders) or whether the funds would buy on open market. Probably the former.

Bloomberg: GE is in talks with four Asian sovereign wealth funds, including China Investment Corp., to win them as investors.

The funds also include Government of Singapore Investment Corp. and Temasek Holdings Pte, also of Singapore, as well as China Safe Investments Ltd., Brussels-based spokeswoman Elma Peters said in a phone interview today.

The negotiations follow GE's $8 billion venture with Abu Dhabi's Mubadala Development Co. as the U.S. company seeks to tap infrastructure spending outside its home market. Getting venture partners to become shareholders has the added advantage of establishing a more stable investor base.

Talks with "a number" of sovereign wealth funds interested in water-technology projects have been held, Steve Bolze, who runs GE's power and water unit, said yesterday in a phone interview from Belfort, France.

Peters confirmed earlier comments from Ferdinando Beccalli- Falco, international head at Fairfield, Connecticut-based GE, reported by the Financial Times Deutschland.

If GE is raising capital with the stock at $14, trends in the finance business have probably deteriorated further.

See Also: Could GE Go To Zero?

From Silicon Alley Insider, Nov. 19, 2008:

As expected, Steve Ballmer hasn't changed his tune about buying Yahoo now that Jerry's stepping down:

Bloomberg: Microsoft Chief Executive Officer Steve Ballmer said all acquisition talks with Yahoo! Inc. are ``done,'' even after Yahoo CEO Jerry Yang said he would step down. Yahoo fell as much as 13 percent in Nasdaq trading.

``We thought we had something that made sense. Didn't make sense to them. We've moved on,'' Ballmer, 52, said today at a shareholder meeting in Bellevue, Washington.

Steve did dangle a juicy search partnership again, though:

He reiterated that a partnership between Microsoft and Yahoo in the Internet-search market is an ``an interesting possibility.'' There are no talks about such a partnership, he said today.

Yahoo should pursue this offer immediately.

See Also: Will Jerry's Departure Bring Microsoft Back To The Table?

Last week, Hank Paulson announced that his original bailout plan -- using taxpayer money to buy trash assets from banks -- was dead and that the government would just be injecting capital into banks instead.

Injecting equity is good, says Christopher Whalen of Institutional Risk Analytics, but now we need a whole new crap-asset removal plan. What should we taxpayers buy with this next chapter of our bailout? The ticking timebomb known as credit default swaps.

Credit default swaps -- insurance against debt defaults -- have already turned insurance company AIG into a black hole: AIG has sucked in $140 billion of taxpayer money so far, and it's just getting started. The entire financial system is exposed to CDSs, Whalen says, and we won't restore confidence until we effectively rip the darn things up.

How much will that cost? Probably $1-$2 trillion.