Posted on 07/11/2008 6:32:32 AM PDT by jalisco555
NEW YORK, July 10 (Reuters) - MasterCard Inc (MA.N: Quote, Profile, Research), the world's second-largest credit card network, will replace Ace Ltd (ACE.N: Quote, Profile, Research) in the Standard & Poor's 500 .SPX, and will also replace General Motors Corp (GM.N: Quote, Profile, Research) in the S&P 100 index .OEX of major blue-chip companies, S&P said on Thursday.
S&P said it is dropping Ace from its flagship index because the insurer is reincorporating in Switzerland, rendering it ineligible for including in S&P U.S. indexes.
MasterCard shares have risen more than sixfold since the Purchase, New York-based company went public in May 2006. GM shares, meanwhile, have this year fallen to levels not seen since the 1950s.
S&P did not in a statement explain why it dropped GM from the S&P 100.
(Excerpt) Read more at uk.reuters.com ...
GM has some real serious problems. They are going to have to abandon Michigan if they are to return to any sense of profitability.
Leave Michigan, and set up shop in “right to work” states without unions.
You’re right. GM is doomed.
This isn’t ‘fear’: GM has no future. It can’t afford its debts and its position gets worse every year.
Thirty years of bad management can kill even the strongest company.
A quick look at Stansberry’s reminds me that GM owns 49% of one of the largest mortgage companies in America, GMAC. Which is going the same way as Freddie Mac’s.
GM aren’t just being dragged down by their unions and their infrastructure: they own 49% of a heavily leveraged piece of debt. The only things GM have going for them is sentiment and a stuttering SUV market.
Not to worry -- GM may very likely slide to the edge of bankruptcy, but the goobermint will ride to the rescue with a bajillion taxpayer dollars to save the failing company.
That, of course, is GM's plan. Huge tax credits for "green" vehicles, govt. guaranteed loans, tariffs on imports, etc. It'll happen if Obama is elected but it won't be enough.
I've heard that even if they open up in a Right to Work state, their current contracts require them to esentially act like they are still under union rules.
I think the only way GM will prosper again is to declare bankruptcy to be able to dump the union contracts. They are a huge lesson to companies to always fund any pension and medical plan with current dollars rather than plan on being a bigger company later on and having money available to fund today's promises tomorrow. GM made a lot of promises over the past 40 years that they have no way of paying for today.
“GM made a lot of promises over the past 40 years that they have no way of paying for today.”
Yes they did in a pro-union piss hole democrat environment.
GM needs to go Chapter 11, bust all the union contracts and hire employees that get paid only what they are worth.
I've read elsewhere that that's not the case. C11 won't void union contracts (someone correct me if I'm wrong). The real advantage of Chapter 11 is that it would allow GM to get out of it's contracts with it's dealers. These contracts, and state franchise laws, prevents GM from eliminating dead brands like Buick and Pontiac and trimming it's excessively large dealer network. Remember, it cost over $1 billion to shut down Olds because they had to pay off all the dealers. Under Chapter 11 that wouldn't be necessary. It's the only way to rationalize the company structure.
Sounds like social security and medicare.
I wonder why they removed GM before F. Ford has 169 Billion in debt while GM has 44 Billion in debt. You read that right B as in Billion.
Ford, unlike GM, has a new management team that seems to understand the problems they face and has a plan to deal with them. The company may not survive but at least they recognize reality and are the likeliest of the (formerly) Big 3 to be around five years from now (Chrysler is doomed).
I differ, GM will be around longer than Ford. You can not compete on level ground with 4 times the debt.
Both companies are in terrible trouble. At least Ford is no longer in denial. But the debt load is certainly horrible.
The big news here is not Mastercard being added to the S&P 100 but GM being dropped.Or put another way. A manufacturing giant is being replaced with a credit card.
Toyota weighs in at ~ $ 81 Billion in short and long term debt.
If a company has assets to back their debt, and those assets are generating more cash than servicing the debt consumes, then having more debt isn't necessarily such a bad thing.
Perhaps a better metric would be shareholder equity - what the owners retain after liabilities are subtracted from assets, and which way that is trending over time. Ford: $7.1B (growing), GM -$41B (holding. kinda-sorta).
Past performance not indicative of future performance. Anyone thinking of investing should check first with their doctor. Women who are pregnant, children under the age of 12, and Seniors with heart conditions should avoid Wall Street.
It's market cap is around 10% of what it was 8 years ago. Not so giant any more.
The DJIA might drop GM if it gets below $5.
Below 5 is a sure fire way to get deleted.
Can the DJIA leave a stock on the Index when it is delisted?
Usually a stock is deleted from the S&P 500 before its delisted from the DJIA. Although Calpine followed weeks after losing its place on S&P.
Note that Eastman Kodak was delisted from the DJIA back in April of 2004, when its stock price was $25 and its market cap was $7.1 Billion.
Don’t know if this makes any difference:
Wikip:
As of December 13, 2007, the Wall Street Journal is owned by Rupert Murdoch’s News Corp.
I would expect my SALARY to go up then!
btt
These stock averages have a great scam going. After someone on the team breaks a leg and an arm you toss them off the team and replace them with a budding young superstar. Then after the rookie starts getting some hits you measure team batting average to prove what a great squad you had for the past year!
The historical measures of the Dow and other indexes overstate gains and understate losses by this trick. So the next time a “financial advisor” con artist tells you to invest in stocks based on historical returns ask him if he would like to be dropped off the team.
;-)
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