Steve Funk's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/137779/comments http://seekingalpha.com/article/168537-the-economic-benefits-of-climate-legislation?source=feed#comment-732538 732538

On Oct 24 08:49 AM Dave Marsh wrote:

> electric car will result in at least three times less CO2 per car-mile;

Dave,
You need to crack that Thermodynamics text again. An electric car charged by coal has inefficiencies of combustion (assume 33%), transmission line loss (90%), charging losses (95%), electro-mechanical conversion (you claim 95%). You multiply efficiencies in an energy chain giving roughly 27% efficiency for the coal charged electric car. I am just using rough numbers and would gladly defer to anyone who does have a textbook handy. To get the CO2 equivalents you need to count the carbon atoms in a BTU of coal vs. gasoline. Since coal is nearly 100% carbon and thermal efficiencies are in the same ball park I am thinking the coal charged electric car will put more CO2 in the air. This does not even take into account the environmental mess all the batteries are going to create. Listen to T. Boone Pickens and go LP. It is the quickest way to affect CO2 and air quality as an intermediate step. We need at least 30 years to build out a new infrastructure and that will not change no matter how many laws Congress passes.]]> Tue, 27 Oct 2009 13:05:15 -0400

On Oct 24 08:49 AM Dave Marsh wrote:

> electric car will result in at least three times less CO2 per car-mile;

Dave,
You need to crack that Thermodynamics text again. An electric car charged by coal has inefficiencies of combustion (assume 33%), transmission line loss (90%), charging losses (95%), electro-mechanical conversion (you claim 95%). You multiply efficiencies in an energy chain giving roughly 27% efficiency for the coal charged electric car. I am just using rough numbers and would gladly defer to anyone who does have a textbook handy. To get the CO2 equivalents you need to count the carbon atoms in a BTU of coal vs. gasoline. Since coal is nearly 100% carbon and thermal efficiencies are in the same ball park I am thinking the coal charged electric car will put more CO2 in the air. This does not even take into account the environmental mess all the batteries are going to create. Listen to T. Boone Pickens and go LP. It is the quickest way to affect CO2 and air quality as an intermediate step. We need at least 30 years to build out a new infrastructure and that will not change no matter how many laws Congress passes.]]> http://seekingalpha.com/article/146304-third-quarter-auto-production-expected-to-boost-u-s-gdp?source=feed#comment-569980 569980
On top of that, with the G'mint now involved with production planning I see product shortages next year. That is never good for anybody. Everyone thinks I am crazy but auto production scheduling is incredibly complex and interlinked. The long shutdowns that are going on now are bound to push some key suppliers into bankruptcy. Congress has already brought up the matter of how far they will go to support bankrupt suppliers and they are shying away from the matter (start by looking at Delphi). Those bankruptcies will further disrupt production.

Gee, in the 1960's and '70's didn't we see product shortages in the USSR when their master scheduling was most in control? Don't fool yourself, it could happen here. Bottom line, stay away from investing in auto or suppliers, and don't look for them to pull us out of the recession soon.
]]> Wed, 01 Jul 2009 11:16:24 -0400
On top of that, with the G'mint now involved with production planning I see product shortages next year. That is never good for anybody. Everyone thinks I am crazy but auto production scheduling is incredibly complex and interlinked. The long shutdowns that are going on now are bound to push some key suppliers into bankruptcy. Congress has already brought up the matter of how far they will go to support bankrupt suppliers and they are shying away from the matter (start by looking at Delphi). Those bankruptcies will further disrupt production.

Gee, in the 1960's and '70's didn't we see product shortages in the USSR when their master scheduling was most in control? Don't fool yourself, it could happen here. Bottom line, stay away from investing in auto or suppliers, and don't look for them to pull us out of the recession soon.
]]> http://seekingalpha.com/article/127163-li-ion-battery-manufacturers-the-bleeding-edge-of-energy-storage-technology?source=feed#comment-436544 436544 Mon, 23 Mar 2009 10:47:34 -0400 http://seekingalpha.com/article/126523-detailing-netflix-s-streaming-costs?source=feed#comment-430771 430771
The other key bottleneck controlling overall throughput is likely to be the ISP program that you choose. Many people have only 256k download capability. A dirty secret of the cable providers is that neighborhoods share bandwith with their technology. How many movies will Netflix be able to push into a neighborhood when 15 households all decide to watch a movie on Saturday night? The overall throughput could easily drop below 100kbps. Your fast Xbox 360 will be starved.]]> Wed, 18 Mar 2009 13:05:33 -0400
The other key bottleneck controlling overall throughput is likely to be the ISP program that you choose. Many people have only 256k download capability. A dirty secret of the cable providers is that neighborhoods share bandwith with their technology. How many movies will Netflix be able to push into a neighborhood when 15 households all decide to watch a movie on Saturday night? The overall throughput could easily drop below 100kbps. Your fast Xbox 360 will be starved.]]> http://seekingalpha.com/article/121126-for-your-amusement-general-motors-restructuring-plan?source=feed#comment-395250 395250
I have followed the auto industry for 25 years as a hobby and as an investor. For quite a few years I was able to make money trading the cycles. Hopefully all "retail" investors have gotten the message to get out of all auto stocks and bonds.

That said, there are so many social implications beyond the fact that the auto companies are now wards of the state and will behave like a state organization. To pin that on the executives is misplaced and I dare say dangerous. The reason it is dangerous is because government meddling for 50 years has brought the auto industry to where it is today. As much as I hate to say it, since this was to a large extent a government induced problem (think big picture here) they probably need to be involved in the fix. There are no good choices left.

What I do know is that operationally the auto companies are not dysfunctional as many have suggested. The Big 3 sold more cars than any other three companies so the product is certainly viable. The problem is financial and not on the operations side. Not enough room here, but close inspection of GM's balance sheet and cash flows will tell you that the problem is not knowing how to build cars efficiently.]]> Thu, 19 Feb 2009 12:28:31 -0500
I have followed the auto industry for 25 years as a hobby and as an investor. For quite a few years I was able to make money trading the cycles. Hopefully all "retail" investors have gotten the message to get out of all auto stocks and bonds.

That said, there are so many social implications beyond the fact that the auto companies are now wards of the state and will behave like a state organization. To pin that on the executives is misplaced and I dare say dangerous. The reason it is dangerous is because government meddling for 50 years has brought the auto industry to where it is today. As much as I hate to say it, since this was to a large extent a government induced problem (think big picture here) they probably need to be involved in the fix. There are no good choices left.

What I do know is that operationally the auto companies are not dysfunctional as many have suggested. The Big 3 sold more cars than any other three companies so the product is certainly viable. The problem is financial and not on the operations side. Not enough room here, but close inspection of GM's balance sheet and cash flows will tell you that the problem is not knowing how to build cars efficiently.]]> http://seekingalpha.com/article/106259-consider-pull-rather-than-push-for-the-auto-industry?source=feed#comment-308076 308076
The reasons for the demise of the domestic auto industry are complex and cannot be summarized in a short column. To do so trivializes the issue and is typical of the current American attitude toward manufacturing. This cavalier attitude and misunderstanding about $48/hour jobs (do you really believe people are clocking hours at $48?).

The truth is that this tradgedy has been unfolding for decades and no one but Lou Dobbs seems to care. I suspect our legislators (who share the blame but get a free pass in every column written), will try to put Humptey back together again but it will be too little too late. GM has some interesting facts about the economic impact of the auto industry on their web site, and say what you will about GM but few would call them grand standers. The repercussions of our failed industries will be alarming and a tradgedy.]]> Mon, 17 Nov 2008 13:29:29 -0500
The reasons for the demise of the domestic auto industry are complex and cannot be summarized in a short column. To do so trivializes the issue and is typical of the current American attitude toward manufacturing. This cavalier attitude and misunderstanding about $48/hour jobs (do you really believe people are clocking hours at $48?).

The truth is that this tradgedy has been unfolding for decades and no one but Lou Dobbs seems to care. I suspect our legislators (who share the blame but get a free pass in every column written), will try to put Humptey back together again but it will be too little too late. GM has some interesting facts about the economic impact of the auto industry on their web site, and say what you will about GM but few would call them grand standers. The repercussions of our failed industries will be alarming and a tradgedy.]]> http://seekingalpha.com/article/105083-the-failure-to-admit-failure?source=feed#comment-303265 303265
Since very few analysts or financial reporters have covered the auto industry in the last two decades there are very few experts to talk about this issue. Mr. Merkel's easy answer that "they" (auto industry) simply be allowed to go out of business is a very glib answer that does not begin to address the repercussions of such a catastrophe. First, he assumes that there will be a Chapter 11 bankruptcy, if it comes to that. Who pays the billions per month in negative cash flow while all the issues are sorted out in bankruptcy court? GM is a very large military contractor and still owns large stakes in Hughes (military satellites). If those interests are sold quickly to the highest bidder probably the only ones with cash will be foreign investors. Is it wise to sell large stakes in a top secret military company? Is it legal? The Pension Benefit Guarantee Corp (i.e. taxpayers) will surely wind up supporting (at least partially) the hundreds of thousands of retireees who will be left high and dry. What of the fallout from dozens of very large corporations being crippled or bankrupted (Lear, Johnson Controls, USX, American Axle, Detroit Diesel, you get the idea).

I don't have the answers to these questions and I don't think anyone does. What does irks me is how glib many are about the auto industry going bankrupt. It shows a total lack of understanding of how industrial complex works. That is not surprising since many believe that we can continue to be a strong economy without producing anything. The second thing that never is mentioned in the many articles like Mr. Merkel's is the huge hand that government regulation and Wall Street have had in the demise of the auto industry. Check into the 1957 Supreme Court ruling that forced GM to divest itself of DuPont (it's proprietary paint supplier) and forced resignation of the Board of Directors. Even in the 1980's engineers were being told that it was illegal to talk out of work with a Ford or Chrysler engineer due to anti-trust rulings. In the 1960's and 1970's the government had a huge hand in backing the Union demands for wages and benefits and unemployment benefits that is at least part of the fixed cost problem that the domestic industry is facing. GM has been coerced by government officials into keeping unprofitable plants open because of local economic concerns.

Obviously a book could be written (and many will) on how the auto industry stumbled. To simply blame it on management and unions is beyond short sighted. I can only hope that our brilliant legislators who brought us to this point will not be as cavalier about the choices we face as Mr. Merkel. ]]> Tue, 11 Nov 2008 15:10:19 -0500
Since very few analysts or financial reporters have covered the auto industry in the last two decades there are very few experts to talk about this issue. Mr. Merkel's easy answer that "they" (auto industry) simply be allowed to go out of business is a very glib answer that does not begin to address the repercussions of such a catastrophe. First, he assumes that there will be a Chapter 11 bankruptcy, if it comes to that. Who pays the billions per month in negative cash flow while all the issues are sorted out in bankruptcy court? GM is a very large military contractor and still owns large stakes in Hughes (military satellites). If those interests are sold quickly to the highest bidder probably the only ones with cash will be foreign investors. Is it wise to sell large stakes in a top secret military company? Is it legal? The Pension Benefit Guarantee Corp (i.e. taxpayers) will surely wind up supporting (at least partially) the hundreds of thousands of retireees who will be left high and dry. What of the fallout from dozens of very large corporations being crippled or bankrupted (Lear, Johnson Controls, USX, American Axle, Detroit Diesel, you get the idea).

I don't have the answers to these questions and I don't think anyone does. What does irks me is how glib many are about the auto industry going bankrupt. It shows a total lack of understanding of how industrial complex works. That is not surprising since many believe that we can continue to be a strong economy without producing anything. The second thing that never is mentioned in the many articles like Mr. Merkel's is the huge hand that government regulation and Wall Street have had in the demise of the auto industry. Check into the 1957 Supreme Court ruling that forced GM to divest itself of DuPont (it's proprietary paint supplier) and forced resignation of the Board of Directors. Even in the 1980's engineers were being told that it was illegal to talk out of work with a Ford or Chrysler engineer due to anti-trust rulings. In the 1960's and 1970's the government had a huge hand in backing the Union demands for wages and benefits and unemployment benefits that is at least part of the fixed cost problem that the domestic industry is facing. GM has been coerced by government officials into keeping unprofitable plants open because of local economic concerns.

Obviously a book could be written (and many will) on how the auto industry stumbled. To simply blame it on management and unions is beyond short sighted. I can only hope that our brilliant legislators who brought us to this point will not be as cavalier about the choices we face as Mr. Merkel. ]]> http://seekingalpha.com/article/103262-nationalizing-detroit-it-s-a-good-idea?source=feed#comment-298757 298757
One popular myth needs addressing first. To those in this column and everywhere else in the popular press who attribute this problem to bad products and bad management: give me data. Here is some to start with. For over twenty years Toyota has had a joint venture with GM (NUMMI). There is one plant in the joint venture in California. They have always produced a Toyota designed small car with Toyota management and Toyota parts. The production is split between a model badged as a Toyota and the other model has had various GM badges. There is no mechanical difference between the two cars, only upholstery and dash design and a much lower price on the GM badged car. If car buyers are rational why would the Toyota consistenly out sell the GM by a wide margin. The fact is the auto industry has become a fashion industry. Just as Levi struggles to sell jeans against Buckle, GM cannot overcome a fashion bias by Americans. This is not an isolated example. Read Lee Iacoca's book about Chrysler's struggle with the similar Mitsubishi joint venture in Illinois.

How does this impact investing? Hard to tell but one of the numbers you have forgotten is the several hundred thousand retiree's living off GM pension, health benefits, and stock dividends (more than active workers). This will definitely bankrupt the Pension Benefit Guarantee Corp when this happens. Something will have to be done quickly because when little old ladies in Saginaw start losing their homes, income and medical benefits you can bet it will make national news. Michael Moore will be first in line to tell the story. I think that this could be Obama's first opportunity to expand the Pension Guarantee program, Medicare, and Social Security all at once.



There might be some investment opportunities there, but it sure is not in the auto industry.]]> Wed, 05 Nov 2008 12:33:41 -0500
One popular myth needs addressing first. To those in this column and everywhere else in the popular press who attribute this problem to bad products and bad management: give me data. Here is some to start with. For over twenty years Toyota has had a joint venture with GM (NUMMI). There is one plant in the joint venture in California. They have always produced a Toyota designed small car with Toyota management and Toyota parts. The production is split between a model badged as a Toyota and the other model has had various GM badges. There is no mechanical difference between the two cars, only upholstery and dash design and a much lower price on the GM badged car. If car buyers are rational why would the Toyota consistenly out sell the GM by a wide margin. The fact is the auto industry has become a fashion industry. Just as Levi struggles to sell jeans against Buckle, GM cannot overcome a fashion bias by Americans. This is not an isolated example. Read Lee Iacoca's book about Chrysler's struggle with the similar Mitsubishi joint venture in Illinois.

How does this impact investing? Hard to tell but one of the numbers you have forgotten is the several hundred thousand retiree's living off GM pension, health benefits, and stock dividends (more than active workers). This will definitely bankrupt the Pension Benefit Guarantee Corp when this happens. Something will have to be done quickly because when little old ladies in Saginaw start losing their homes, income and medical benefits you can bet it will make national news. Michael Moore will be first in line to tell the story. I think that this could be Obama's first opportunity to expand the Pension Guarantee program, Medicare, and Social Security all at once.



There might be some investment opportunities there, but it sure is not in the auto industry.]]> http://seekingalpha.com/article/99545-gm-chrysler-merger-a-disastrous-deal?source=feed#comment-281257 281257
There is one last ditch possibility. Perhaps this is not a bone headed business move (GM has long disdained Chrysler), but a desparate political move. If GM really is on the ropes, they might as well make a "too big to fail" organisation. Combining with Chrysler pretty much makes Congress choose whether or not they want US car companies. In the current wave of nationalisation they will very likely come under the protection of the Federal government. If you think product cycles are slow now, just wait until that happens. With so much uncertainty I am not sure why anyone would still be in auto stocks.

Just a side note. No one ever talks about the special controlling class of stock that the Ford family owns. There are now hundreds of trust fund Ford families living off this stock dividend. A vote to merge would certainly be a vote to cut off all funds to the Ford family who have not worked for generations (except Bill). They will choose to go down with the Titanic hoping there will be a lifeboat in it for them. I wish them luck. ]]> Mon, 13 Oct 2008 10:43:06 -0400
There is one last ditch possibility. Perhaps this is not a bone headed business move (GM has long disdained Chrysler), but a desparate political move. If GM really is on the ropes, they might as well make a "too big to fail" organisation. Combining with Chrysler pretty much makes Congress choose whether or not they want US car companies. In the current wave of nationalisation they will very likely come under the protection of the Federal government. If you think product cycles are slow now, just wait until that happens. With so much uncertainty I am not sure why anyone would still be in auto stocks.

Just a side note. No one ever talks about the special controlling class of stock that the Ford family owns. There are now hundreds of trust fund Ford families living off this stock dividend. A vote to merge would certainly be a vote to cut off all funds to the Ford family who have not worked for generations (except Bill). They will choose to go down with the Titanic hoping there will be a lifeboat in it for them. I wish them luck. ]]> http://seekingalpha.com/article/88748-default-risk-of-u-s-automaker-debt-too-big-to-fail?source=feed#comment-222301 222301 Mon, 04 Aug 2008 11:41:17 -0400 http://seekingalpha.com/article/88870-lithium-ion-batteries-and-centerfolds-the-final-chapter?source=feed#comment-222241 222241 Mon, 04 Aug 2008 10:59:33 -0400 http://seekingalpha.com/article/84331-troubled-vmware-s-lowest-close-ever?source=feed#comment-202312 202312
Instead of technology, you should consider barrier's to entry in the marketplace. Ultimately that is what did in Netscape. If you have enough time and money (as MS does), these software technologies just are not that hard to duplicate and if priced right managers are not going to count CPU cycles before buying a particular technology. It is all about the marketing and I have not seen VMWare be proactive in their marketing plans. I think that EMC cashed out at the right time and investors are now beginning to realize that. This will be just another good software company with good cash flow, low dividends, and constant market threats that make the stock volatile. Not a great investment.]]> Thu, 10 Jul 2008 12:22:42 -0400
Instead of technology, you should consider barrier's to entry in the marketplace. Ultimately that is what did in Netscape. If you have enough time and money (as MS does), these software technologies just are not that hard to duplicate and if priced right managers are not going to count CPU cycles before buying a particular technology. It is all about the marketing and I have not seen VMWare be proactive in their marketing plans. I think that EMC cashed out at the right time and investors are now beginning to realize that. This will be just another good software company with good cash flow, low dividends, and constant market threats that make the stock volatile. Not a great investment.]]> http://seekingalpha.com/article/82989-how-i-plan-to-trade-my-depressed-gm-stock?source=feed#comment-195904 195904
GM has pulled off miracles of fund raising in the past (1992) but it looks even harder this time. All auto companies burn cash at high rates due to hard capital and labor laws cannot reduce those expenses quickly. If GM cannot raise capital by this fall they will have to be taken private like Chrysler and there will be no stock bounce. (Bill Gates could write a check for GM right now).]]> Mon, 30 Jun 2008 11:06:24 -0400
GM has pulled off miracles of fund raising in the past (1992) but it looks even harder this time. All auto companies burn cash at high rates due to hard capital and labor laws cannot reduce those expenses quickly. If GM cannot raise capital by this fall they will have to be taken private like Chrysler and there will be no stock bounce. (Bill Gates could write a check for GM right now).]]> http://seekingalpha.com/article/83137-is-general-motors-closer-to-a-default?source=feed#comment-195874 195874
As for investing, there has to be someone looking at taking GM private. Serberos could combine GM and Chrysler and actually start getting some economies out of the deal. Ford would be a candidate, but the Ford family has shown themselves time and again to put their trust fund ahead of good business judgement, and they own controlling stock. Until this shakes out the auto stocks are way too dangerous. And that does not have anything to do with EV1 (which could not sell) or dealer performance.]]> Mon, 30 Jun 2008 10:38:53 -0400
As for investing, there has to be someone looking at taking GM private. Serberos could combine GM and Chrysler and actually start getting some economies out of the deal. Ford would be a candidate, but the Ford family has shown themselves time and again to put their trust fund ahead of good business judgement, and they own controlling stock. Until this shakes out the auto stocks are way too dangerous. And that does not have anything to do with EV1 (which could not sell) or dealer performance.]]> http://seekingalpha.com/article/80363-why-microsoft-will-never-win-again?source=feed#comment-180323 180323
First, with such high market penetration in the OS and Office market there really is nowhere to go but down in market share. The only question is how far and how fast they will go down. IBM and GM are good studies in this respect. All three have had dominating market postions, then a Justice Department decree, then the struggle to hold on to market share.

No one mentions the fact that Obama has declared that he will strengthen anti-trust enforcement. Any question who is on his target short list? That will have a bigger impact than technology shifts or Google.

All of the "religious" discussions, such as OpenOffice.org, discount Microsoft's impeccable P&L and balance sheet. In the end the one with the most cash and best management to put that cash to good use will win. Unless there are government interventions.]]> Fri, 06 Jun 2008 10:30:42 -0400
First, with such high market penetration in the OS and Office market there really is nowhere to go but down in market share. The only question is how far and how fast they will go down. IBM and GM are good studies in this respect. All three have had dominating market postions, then a Justice Department decree, then the struggle to hold on to market share.

No one mentions the fact that Obama has declared that he will strengthen anti-trust enforcement. Any question who is on his target short list? That will have a bigger impact than technology shifts or Google.

All of the "religious" discussions, such as OpenOffice.org, discount Microsoft's impeccable P&L and balance sheet. In the end the one with the most cash and best management to put that cash to good use will win. Unless there are government interventions.]]>