Breaking: GM CEO Whitacre to Step Down September 1
By Chris Haak
I can hear the ticker-tape machines humming away in the background as I write this from the Full Metal Autos newsroom. Hot off the press comes word that 68 year old GM Chairman and CEO Ed Whitacre is relinquishing his CEO title on September 1, 2010. Replacing him will be current GM board member, 61 year old Dan Akerson (pictured here). Whitacre will remain as GM Chairman through the end of 2010, at which point Akerson will assume those duties as well.
In a curious twist of fate, Dan Akerson in some ways shares his predecessor’s prior experience. Whitacre, of course, was CEO of AT&T until his retirement a few years ago, and Akerson is the former CEO of Nextel Communications. Currently, Akerson is serving as Managing Director of the Carlyle Group, a private-equity concern. Akerson was named to GM’s board in July 2009 as the company exited bankruptcy. His board membership was intended to represent the US Treasury’s interests in the automaker, which of course is majority-owned by the US government. Also on Akerson’s resume is the fact that he is a current member of the board of directors of American Express.
GM is expected to file for its IPO tomorrow, having just secured a $5 billion line of credit in the capital markets. GM’s IPO is expected to be the second-largest initial public offering in history, raising between $12 and $16 billion. The IPO is a necessary step prior to the Treasury divesting its 61 percent ownership of the company over time through a series of stock sales on the public markets.
GM reported good earnings for the second quarter, though they weren’t as good as Ford’s Q2 results. Still, the $1.3 billion in net income for the second quarter was a remarkable turnaround for a company that lost $12.9 billion in the second quarter of 2009. Revenue leapt from $23.0 billion in Q2 2009 to $33.2 billion in Q2 2010, thanks to both increased sales as the auto market recovers, but also much higher production volume in 2010 than the company had in 2009 as it slid into Chapter 11 bankruptcy protection. The first two quarters of 2010 mark the first time that GM has had back-to-back profitable quarters since 2004.
All of the company’s global regions were profitable in the second quarter with the exception of the company’s struggling European arm. GM Europe lost $200 million in the quarter, as the overall market is soft, and Opel is having trouble finding traction with buyers.
Many observers, us included, wondered what GM’s succession plan would be for the CEO role, once Ed Whitacre stepped down. The company kept quiet on who the next CEO would be, and didn’t even indicate that it knew who the individual would be. Several of us expected to see Whitacre hang on to the job a bit longer, since he appeared to enjoy the job and saw that there was still a considerable amount of work to do in order to get GM to a level of sustainable success.