GM recruits auto analyst Girsky from Morgan Stanley

Forecaster of more losses will advise on turnaround

July 19, 2005|By BLOOMBERG NEWS

DETROIT - General Motors Corp., the world's largest automaker, has hired top-ranked auto analyst Stephen Girsky from Morgan Stanley to advise its executives as they try to return the company to profitability.

Girsky, 43, will join GM Aug. 1, the automaker said yesterday. He will advise Chief Executive Officer Rick Wagoner and Chief Financial Officer John Devine.

GM is seeking outside advice after losing $1.1 billion in the first quarter, its biggest quarterly loss in 13 years. Declines in U.S. auto sales and a drop in market share to its lowest in 80 years have eroded revenue at the automaker. Girsky, in a June 7 report, estimated GM's North American operations will have a $4 billion loss this year before taxes.

"One of the hardest things for a CEO to get is real information," said Maryann Keller, an independent auto analyst who herself left Wall Street to become president of Priceline .com's new-auto operations. "People say what they think he wants to hear. There's an unbelievable myopia in Detroit."

GM, which is to report second-quarter earnings tomorrow, is in talks with the United Auto Workers on ways to reduce health care costs. Wagoner, 52, assumed direct control of the automaker's North American operations in April in an effort to revive sales, reassigning Vice Chairman Robert Lutz and Group Vice President Gary Cowger.

Girsky, who spent 18 years on Wall Street, comes to GM with connections in the union. UAW President Ron Gettelfinger invited him to speak at a UAW convention in Las Vegas in June 2002, three days after Gettelfinger's election as UAW chief.

"I bring an outsider's perspective to the company," Girsky said in an interview. "The challenge is very clear here. The industry is under stress."

The average forecast for GM's second-quarter profit among 15 analysts surveyed by Thomson Financial is 2 cents a share. Forecasts range from a loss of 56 cents a share to a profit of 50 cents.

GM stock fell 23 cents to close at $36.51 yesterday on the New York Stock Exchange. It's down 8.9 percent this year.

Former Ford Motor Co. CEO Jacques Nasser said his company had made preliminary contacts about hiring Girsky during Nasser's tenure as chief executive from 1999 to 2001.

"This is great for GM and for the auto industry," Nasser said yesterday. "It sends a message in terms of the negative sentiment around the industry that it can still hire a person of Steve's caliber."

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