Slashed and Divided

Answer to last weeks trivia: Corvettes have been built in Lancing, St. Louis, and Bowling Green(current production).

This week GM announced that it is dropping their dividend payout in half. This is good because it will save millions of dollars. However, this has caused some banks to advice their stockholders to sell the stock. Another cost cutting measure taken is that Wagner has cut his own salary in half and the executive's salaries across the board between 30 and 10%. Overall this will save the company approximately 500 million a year. Thats a far cry from the 8 billion in profit lost in 2005. However, its more of a PR stunt so that people dont say, "Maybe they wouldn't have to fire all those employees if the executives took a pay cut!". Wagner should probally follow the lead of Ford's CEO and take a 100% paycut for himself until they become profitable again. There is still a lot of work to be done this year to make up that 8 billion dollar gap. With a brand new SUV line added to an already solid lineup of cars it would seem a bit of key marketing this year could put them in a position to cut their deficit in half or even more. If not expect to see GMAC sold off pretty quick to stave off bankrupcy.

This weeks trivia question: In what year was the last time GM has cut its divdends?
The answer can be found in next week's post.