Friday, February 20, 2009


Saab, the Swedish automaker owned by GM, has had losses in 19 of the last 20 years. This qualifies for the moniker "profit-proof". Saab is obviously incapable of making a profit. It probably deserves to go away and the Swedish government recognizes this. Apparently, it took GM a long time to give up on Saab. And, it only did so when it ran out of cash.

You can't wish a company to profitability. I explained to Gail once, that financially troubled companies operate as business as usual until they run out of cash. It doesn't matter that they stopped making a profit for years. The only way to get a financially-troubled company to make the right decisions is to cut the cash spickot to a trickle. Hmmm, think GM and Chrysler should get as much cash as they requested?

Cheers, Mike

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