General Motors - Price Target Remains $0

We believe that the best chance for General Motors Corp. (GM) survival in the long run is to file for bankruptcy to rid itself of Unions, pension and health care issues, and separate dealerships from the rest of the company.

Unconvinced with the restructuring plan that GM presented on February 17, 2009, the administration forced CEO Rick Wagoner to resign and gave the company 60 days to formulate a viable restructuring program. President Obama warned General Motors unions and bondholders to push GM into bankruptcy in order to force them to accept serious cuts. A bankruptcy would impel bondholders to suffer big losses on $29 billion of unsecured debt.

For the company to be viable, it should focus only on 35MPG+ vehicles, which will be in demand in the long term. Consumers should be allowed to deduct their automotive interest. Lastly, global alliances should be forged amongst producers in North America, Europe and Asia.

From an equity holder’s perspective, these compel us to rate the shares a Sell with a six-month target price of $0.00.

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