GM shares set to open lower after Kerkorian's sale
DETROIT, Dec 21 (Reuters) - Shares of General Motors Corp. are
expected to fall further in Wednesday trade after hitting an 18-year low
on
Tuesday, following the news of billionaire Kirk Kerkorian's investment arm
selling 12 million GM shares.
GM shares, already down 50 percent this year, fell 2.6 percent in
pre-market
trade on Wednesday after Kerkorian reduced his stake in the company to 7.8
percent from 9.9 percent late Tuesday.
"Tracinda accumulating a 10-percent GM stake, much via public tender,
bred
speculation that value-creating strategic changes ... was more probable,"
Goldman Sachs analyst Robert Barry wrote in a research note on Wednesday.
"Now we expect that sentiment to reverse, at a time when fundamental
pressures are growing, option value from UAW deals on healthcare and a
North
American restructuring is gone, and key restructuring architect, CFO
Devine, is
leaving."
The world's largest automaker earlier this month announced plans to
replace
Chief Financial Officer John Devine with Frederick "Fritz" Henderson,
chairman
of GM Europe.
Las Vegas investor Kerkorian said in a filing with the Securities and
Exchange Commission that he sold his stock for $252 million to take
advantage of
tax savings stemming from his investment losses.
GM's slide in shares reflects more pessimism over its financial outlook
as
it struggles with high health-care and commodities costs, loss of U.S.
market
share to foreign rivals and sinking sales of large SUVs, its long-time
profit
generators.
To make matters worse, a strike at bankrupt Delphi Corp. could
shut down plants and force the automaker to burn through billions of
dollars a
week, analysts say.
GM shares closed at $19.85 in Monday trade on the New York Stock
Exchange.
They fell to $19.63 earlier in the day -- their lowest level since 1987,
after
being adjusted for the spinoff of Delphi Corp. in 1999.
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