Wall Street analysts typically react in lockstep to news from Detroit. Not this time.
General Motors CEO Rick Wagoner got a mixed response when he opined last week that shedding 30,000 UAW workers by Jan. 1 - 35,000 buyouts, minus a 5,000-worker flowback from Delphi - gives the company "a fast start" in its cost cutting.
Analyst John Murphy of Merrill Lynch applauded. He reiterated a buy recommendation, praising GM's "buyout boon." And J.P. Morgan analyst Himanshu Patel continued a favorable "overweight" rating for GM.
But there were doubters.
Standard & Poor's said it will keep GM on a credit watch. GM still must grapple with market share losses and Delphi's quest to dump unprofitable GM contracts, S&P said.
And Robert Barry of Goldman Sachs said the buyouts are a sign of GM's weakness, not a turnaround. Some view GM's cost cutting "as evidence that a turnaround is under way, or even gaining traction," he wrote. "But we think accelerated cost cutting only helps further GM's ability to offset fundamental pressures, and that a true turnaround must evidence top line (revenue) improvements."
Translation: GM needs to sell more cars.