General Motors said that its auditors have cast “substantial doubt” on its ability to keep operating, and that it may be forced into bankruptcy if its restructuring plan fails to take hold. GM’s auditing firm found that “our recurring losses from operations, stockholders’ deficit and inability to generate sufficient cash flow to meet our obligations and sustain our operations raise substantial doubt about our ability to continue as a going concern,” the company said in its annual report filed today.

The report says that GM’s ability to recover depends on vehicle sales picking up, but there’s no sign of that so far. U.S. vehicle sales have tumbled 40% from the peak in 2007, and GM’s February sales fell 53% from the same month last year. While the auditor’s conclusions were expected, investors still reacted adversely, driving GM’s stock down more than 15% in midafternoon trading. That helped driving the overall market down, with the Dow falling to new bear-market lows, down more than 200 points at 3 p.m.

Source: Detroit News

Rate Cuts in Europe

Both the Bank of England and the European Central Bank cut their benchmark rates by half a percentage point, to 0.5% and 1.5% respectively. The ECB rate is a record low, and the bank’s president, Jean-Claude Trichet, suggested that it could well cut rates farther or engage in “non-standard” monetary policy maneuvers to help offset the effects of the downturn. The Bank of England also announced a program to essentially print money by spending $106 billion to buy up corporate and government bonds over the next three months to combat a possible deflationary spiral.

Source: MarketWatch.com

U.S. Retailers Bounce Back a Bit

Big chains reported some unexpected good news, with same-store sales rising 0.7% in February according to RetailMetrics, considerably better than the decline of 1.1% that analysts had predicted. Of course, most of that gain came from the biggest store of all, Wal-Mart, whose sales rose 5.1%. Wal-Mart has been faring well through the downturn because more consumers are hunting for bargains, and also announced it will boost its dividend by 15%. The February gain for retailers was the first since September and stemmed from stores showing new inventory for spring.

Source: Bloomberg

Factory Orders Fall Again

Manufacturing, on the other hand, continues to suffer, with factory orders dropping 1.9% in January on weak durable-goods sales. The factory measure has now fallen for six straight months, the first time that has happened since it was created in 1992.

Source: MarketWatch.com

Cuomo Subpoenas More Merrill Execs

New York Attorney General Andrew Cuomo last night issued subpoenas to seven Merrill Lynch executives who got bonuses worth more than $10 million last year, shortly before Bank of America took over the investment bank. The latest subpoenas are part of a probe initiated in January by Cuomo’s office into $3.6 billion in bonuses that Merrill, which Bank of America acquired after receiving $20 billion in government assistance, gave earlier than usual. Cuomo’s lawyers have already questioned BoA’s chief executive, Ken Lewis, as well as former Merrill CEO John Thain. In January, when news first broke of the unusual timing of the bonuses, BoA placed the blame for the bonuses on Thain, but according to evidence that has come out over the past few weeks, BoA executives were more involved than they earlier indicated.

Source: Financial Times

Google, Universal in talks on music video partnership

Universal Music Group, a unit of Vivendi, is negotiating with YouTube to have the Google subsidiary host music videos and help distribute them to other web sites. According to people familiar with the negotiations, which have been going on since last year, the two sides are in advanced stages of talks. Music videos are among YouTube’s most popular features, and the plan, if successful, would help Universal and YouTube make them more appealing to advertisers.

Source: Wall Street Journal

Corporate Cash: Big Stockpiles for Tough Times

At a time when the economy is experiencing its steepest drop-off since the depths of the 1982 recession, it’s perhaps not surprising that cash is the new black at big corporations—and the bigger the pile, the better. With that in mind, BusinessWeek sought out 21 U.S. outfits that most aggressively stockpiled cash in the most recent quarter. Collectively, this group of companies added $83.7 billion to their balance sheets. By contrast, they reduced their cash by a total of $808 million during the same quarter of 2007.

Source: BusinessWeek

Ford Announces Plan to Cut Debt by $10.4 Billion

Ford yesterday offered to give $2.2 billion in cash to holders of $10.4 billion in convertible notes. That will help the automaker trim its interest costs, Ford said. The company also reiterated that it does not plan to follow the lead of Big Three rivals General Motors and Chrysler in seeking federal bailout funds.

Source: Associated Press

Beer Giant AB InBev Reports Better-than-Expected Earnings

Anheuser-Busch InBev on Thursday announced earnings before interest, tax, depreciation and amortization rose 5.3% to $2.16 billion in the fourth quarter. The company is the world’s largest brewer, also said the synergies from its 2008 merger would now total $2.25 billion, compared to an earlier announced minimum goal of $1.5 billion. The company’s shares rose 4.8% in early trading and have doubled since November.

Source: Reuters

Risk of De-Globalization as Crisis Sends Workers Home

Singapore, Dubai, Britain and other countries that once attracted foreign workers are now seeing an exodus as a collapse in world trade is sending white-collar and blue-migrants home. Singapore will lose 200,000 foreigners by the end of next years, estimates Credit Suisse. According to economist Jeffrey Sachs, the exodus is one indication “the collapse of globalization…is absolutely possible.”

Source: Washington Post

Venezuela’s Chavez Orders Cargill Nationalization

At least some of the Venezuelan operations of Cargill will be nationalized, President Hugo Chavez said yesterday. In a nationally televised speech, he accused the U.S. agribusiness company of trying to evade price controls. Chavez also threatened to nationalize Polar, a local food company.

Source: CNNMoney

Chinese Premier Says No Need for More Stimulus

Premier Wen Jiabao said China may not need to increase its $585 billon stimulus package. In a speech opening the National People’s Congress in Beijing, the Chinese leader said it’s possible for China to meet its target of 8% GDP growth this year. Stock prices in Shanghai, which had soared yesterday after a former top official said Wen would reveal plans for more spending in his speech, rose another 1% today.

Source: Bloomberg

IN YOUR FACE: Bank Nationalization

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