Analysis: Wall Street frustrated with pace of change at GM

Thu Oct 18, 2012 11:34am EDT
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By Ben Klayman

DETROIT (Reuters) - General Motors Co is frustrating the hell out of Wall Street.

Many securities analysts have "buy" ratings on the stock and are hopeful that a raft of new cars and trucks hitting showrooms over the next year could ignite growth at the automaker, which was bailed out by the U.S. government in 2009.

Yet they have nagging doubts. GM's European business is a mess, there is a big question mark over whether growth is slowing in China, and they worry the U.S. government's stake is holding the company back. There also are concerns that Chief Executive Dan Akerson is not communicating with investors clearly enough or pushing to change GM's hidebound culture fast enough.

And while GM shares have gained more than 25 percent this year to trade at around $25.50, outperforming the S&P 500 index's 16 percent rise, they are still well below their 2010 initial public offering price of $33 a share.

"People thought this new company would have this new sense of energy and momentum and in both cases you don't feel it," said Citi analyst Itay Michaeli, who nonetheless rates GM stock a "buy" as he feels it is undervalued and that management has done a reasonable job given the recession in Europe.

Not helping matters is a corporate culture marked by arrogance and insularity that Akerson failed to break after he took over in September 2010, analysts and bankers said.

Current and former employees have described too many managers operating under too much bureaucracy, a lack of urgency to change or accountability to perform, and a feeling of being stuck in an era when GM dominated the automotive market.

Akerson has acknowledged changing that culture was not tackled in GM's restructuring, and several former executives say the CEO's vision still has not been effectively driven into the lower layers of management.   Continued...

The General Motors logo is seen outside its headquarters at the Renaissance Center in Detroit, Michigan August 25, 2009. REUTERS/Jeff Kowalsky