TOP 100 RACING SITES
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| Kurt Busch Wins Kobalt Tools 500 at Atlanta Kurt Busch, a former champion in Nascar’s top series who has been overshadowed lately by his brother Kyle, drove to a dominating victory at Atlanta Motor Speedway. nytimes.com |
Porsche's Gambit to Acquire and Now Merge With VW Could Unravel Based on a new report issued by investment banking firm Sanford Bernstein Thursday, a lot of Volkswagen investors still hanging on may want to unload their shares. Moreover, if the firm is correct, Porsche’s current 51% stake in VW could be worth a whole lot less than it is now in a few months.VW’s share price, which closed Thursday at 222.55 euros, down 1.33, could hit as low as 65 euros in the next six months if Porsche AG’s plans to merge with Volkswagen AG don’t get a boost somehow from VW or the markets--scenarios that seem increasingly unlikely.Porsche has been accumulating shares in VW with the intention of going all the way to 70% or 75% of the automaker. The advantage of that plan, though, got derailed when German courts upheld the 20% ownership of VW by the State of Lower Saxony earlier this year. That ownership dates back to post World War Two when VW was emerging from the rubble of the German defeat by the Allied forces.Bernstein said that Porsche is facing three scenarios, and none of them are good. Under the first one, Porsche admits it can't afford to take up it’s the options it holds to increase its holding in Volkswagen to 70% and walks away. Under the second scenario, Porsche has an obligation, rather than an option, to buy the additional shares but can't afford to and defaults. Under the third scenario, Porsche is forced to sell some of its existing stake to finance the obligatory purchase of the options.Part of the problem is that Porsche has been coy about disclosing whether these are options it holds or obligations. In the U.S. you would have to disclose such things. In Germany, you don’t. But lots of rumors are swirling. And investment researchers don’t much like the opaque nature of what Porsche has been up to. Keep in mind that Porsche AG a few years ago had plans to list its shares on the New York Stock Exchange. But along came Sarbanes-Oxley legislation and new financial reporting rules, and Porsche CEO Wendelin Weideking said he was no longer interested. Makes you wonder.Among the signs of trouble brewing cited by Bernstein were rampant rumors in the banking community that Porsche struggled to refinance its debt in March (they did so in the end), news that the two companies will try and merge rather than Porsche swallowing Volkswagen, and comments from Porsche and VW management spelling out that Volkswagen will not help it repair its balance sheet.Porsche could soon see liquidity problems. It had net debt of 9 billion euros ($12.2 billion) at the end of it’s most recent six-month reporting period. That was much more than Bernstein analysts anticipated.The broker said it believes that the "investment subsidiaries" figure of 6.3 billion euros in Porsche's reported cash flow statement at the end of the first half of its reporting year is actually the cost of the purchase of Volkswagen shares. The figure implies Porsche paid more than 110 euros a share.The current market valuation of VW is more than 40 times the average earnings of the past ten years. That valuation seems more a function of Porsche having locked up all the free floating shares via its own stake building and options, according to the Bernstein report.As a consequence, if for any reason Porsche cannot deliver on its plans to buy the shares, their bank counterparties will sell Volkswagen shares back into the market. At the most, Bernstein estimated the market might be willing to pay 75 euros a share.Even that would be far below Porsche’s cost. rss.businessweek.com |
Car Wars: Hyundai, Ford and Honda Big Winners On the heels of bankruptcy, General Motors and Chrysler will give up a combined 11 points of market share in the next four years, according to a report by Wall Street firm Merrill Lynch.In its annual “Car Wars” study, the firm estimates that General Motors will give up 5 points of market share, or about 25% of its current business, while Chrysler will lose six points of share, roughly cutting the company in half from what it is today.If GM and Chrysler are the big losers in the next few years, who are the winners? ML analyst John Murphy estimates that Hyundai-Kia, Ford and Honda will each gain 3 points of market share or more. Traditional Asian juggernauts Toyota and Nissan will also gain share, but at a slower rate.Chrysler, which was recently taken over by Italian automaker Fiat with help from the U.S. government, will suffer, said Murphy, because of lack of investment in new products from Cerberus Capital Management in the last two years, as well as scant investment by Daimler the last two years it owned Chrysler before selling to the private equity firm.Not surprisingly, new products are what drives share. The Merrill Lynch report notes that Hyundai will have the fastest flow of new products, replacing 27% of its showroom with new product a year for the next four years. Between Hyundai and Kia, says Murphy, the Korean tandem should gain 3.5 points of share. Meantime, Ford, says Murphy, is set to replace 25% of its showroom in the same time-frame, with an emphasis on small cars and fuel efficient crossover vehicles that are well timed to the market.Honda is replacing 25% of its showroom a year for the next four years, with essentially almost all replacements for existing vehicles—Accord, Civic, Odyssey, CR-V. “There is a lesson in that—produce great product and keep improving it year after year,” says Murphy.Toyota and Nissan, according to Merill Lynch’s research, will be launching new products in the next four years at a slower rate than they have in the past. And he projects that Toyota will only gain one additional share point, while Nissan should pick up a half point.Europeans, despite an onslaught of new products from Volkswagen, should maintain the same level of market share.Gains in market share will be crucial to future profitability. The recession has forced GM and Chrysler into Chapter 11 bankruptcy reorganization. Those two, along with Ford, have shed excess manufacturing facilities, onerous union contracts and healthcare liabilities, driving down each company’s break even point dramatically from what it was in years gone by. Chrysler, for example, has set its break-even point at 10% of a 10 million unit auto industry.Ford is working on a plan to be profitable at it current market share of 15.5% with an industry selling 10.5 million. If Ford gains three share points in the next four years and industry sales rebound to 13 million to 14 million as many expect, Ford, for example, stands to be hugely profitable in North America. Three additional share points of a 14 million unit industry translates to 740,000 more vehicles per year than it is selling today.GM’s forecast is more toubling. “We believe that GM’s 18%-19% market share target is optimistic and a more realistic range is 15%-16%,” said Murphy. Merrill Lunch estimates that GM will only be replacing 11% of its showroom per year over the next four years as it reorganizes around Chevrolet, Buick, GMC and Cadillac in North Americas, having sold or closed Saturn, Saab, Pontiac and Hummer. rss.businessweek.com |
Jack Daniel's to leave Childress team at season's end Richard Childress Racing will lose sponsor Jack Daniels at the end of the season. Jack Daniel's has been with RCR since 2005 ... rssfeeds.usatoday.com |
Fox Sports year in review videos VIDEO EXCLUSIVE: From the year of the Cat and the Storm, to Australia losing the Ashes and the Socceroos qualifying for the FIFA World Cup: 2009 has been a big year in sport. foxsports.com.au |