Buckingham Research Reiterates 'Underperform' Rating on General Motors (GM), Dividend Cut Likely

June 24, 2008 1:44 PM EDT

Buckingham Research reiterates an 'Underperform' rating on General Motors (NYSE: GM). Price target lowered from $10 to $8.

Buckingham analyst says, "We continue to believe GM has liquidity issues and will have to raise capital given the significant automotive cash burn that GM is likely to experience in 2009 and 2010. We believe it will become evermore challenging for management to raise capital (at a reasonable price), after the company releases its June 2008’s monthly sales and 2Q08 earnings results. We continue to believe any capital raised will be dilutive to shareholders...We now expect GM to burn through $9B in cash for both 2008 and 2009, with the majority of the cash burn occurring in North America given the expected production declines for GMT900, its most profitable platform...We believe it is becoming evermore likely that GM’s current cash dividend could be eliminated or cut as management likely has to raise capital to remain solvent beyond 2008."

(From Wikipedia - The GMT900 debuted at the 2006 North American International Auto Show, as the next generation full-size pickups and SUVs, and replacements for the GMT800 vehicles. The first GMT900 vehicle is the next-generation Chevrolet Tahoe)

General Motors Corporation (GM) is engaged in the worldwide development, production and marketing of cars, trucks and parts.[SM]

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