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Whitacre - Right Man for the Job?

|Includes: General Motors Company (GM)

As reorted on every major news agency last night and this morning:

GM ousts CEO, vows progress. Faced with large challenges, General Motors said Tuesday CEO Frederick "Fritz" Henderson will step down and Chairman Edward Whitacre will take his place until a permanent replacement is found. Whitacre, the former AT&T chief installed by the Obama administration, said GM needs "to accelerate our progress," and that the next step is to return the company to profitability and repay tens of billions of dollars in loans owed to U.S. and Canadian taxpayers. GM will presumably focus on selling off brands it has struggled to shed outside its four core brands, Chevrolet, Cadillac, Buick and GMC.

This is an interesting turn of events.  If you look at Whitacre's history, he is responsible for one main thing at AT&T, rebuilding the old "Ma Bell".  As CEO of Southwestern Bell, he grew the company through the acquisition of Pacific Telesis (1997 - RBOC), SNET (1998), Comcast Cellular (1999), Ameritech (1999 - RBOC), AT&T (2005), and the 2006 acquisition of Bell South (RBOC).

What sort of strategy can we expect from him in the interim?  Based on his history, Opel will be kept (which I have argued made sense due to their small car platform) and the other brands, if they cannot be sold, will exist in smaller form.  Mr. Whitacre is great at taking costs out of a company, but some would argue this is done on the back of the customer - one of GM's primary historic problems.

I thought that GM was on the right track (except the sale of Opel) and was starting to get the company's focus together.  In my opinion Whitacre is not the right man for the job and bringing in an outsider will not be easy (pay constraints, government on your back...).  Not optimistic on the company's future.


Disclosure: Disclosure: no positions in GM (aside from being a taxpayer)