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Akerson to lead GM into new era

Revolving door: Dan Akerson (left) replaces Edward Whitacre to become GM's fourth chief executive in 18 months.

GM names former telco exec Dan Akerson as CEO as Q2 profit climbs and IPO looms

General Motors logo13 Aug 2010

GENERAL Motors has named former telecommunications executive Dan Akerson as its incoming chief executive, announcing overnight that Edward Whitacre would step down from the position at the US auto giant on September 1 after eight months in the chair.

The surprise announcement came as GM posted its second consecutive quarterly profit after a string of losses since 2007, and as the company, which is 61 per cent owned by the US government, prepares to launch a public share float.

Mr Akerson, 61, has served on the GM board since July last year and will become GM’s fourth chief executive in just 18 months.

Mr Whitacre, 68, replaced former CEO Fritz Henderson – who also lasted only eight months in the job, having succeeded Rick Wagoner – on December 1, and will also step down as chairman (a position he has held since June 2009), by the end of the year.

Mr Akerson will become the new chairman at that point.

Mr Whitacre said in a conference call that the GM board was aware that he did not consider his role as a long-term placement.

“It was obvious that I was not going to be at GM for the long haul,” he said. “We have put a strong foundation in place, so I am very comfortable with my timing.

“My goal in coming to General Motors was to help restore profitability, build a strong market position and position this iconic company for success. We are clearly on that path.”

Lead director on the GM board, Pat Russo, said: “Ed Whitacre was exactly what this company needed, at exactly the right time. He simplified the organisation, reshaped the company’s vision, put the right people in place and brought renewed energy and optimism to GM.

 center imageLeft: General Motors vice chariman and CFO Chris Liddell.

“Dan Akerson has been actively engaged in, and supportive of, the key decisions and changes made at the new GM. He brings broad business experience, decisive leadership, and continuity to this role.”

As well as serving on the GM board, Mr Akerson has been managing director of private equity firm The Carlyle Group, in charge of global buyouts. He is also a former chairman and CEO of XO Communications (1999-2003) and Nextel Communications (1996-1999).

In a statement, Mr Akerson said: “There are remarkable opportunities ahead for the new GM, and I am honoured to lead the company through this next chapter. Ed Whitacre established a foundation upon which we will continue building a great automobile company.”

In a conference call, Mr Akerson said later that there were “remarkable opportunities ahead for the new GM”.

“We still have important work ahead of us,” he said. “But I am confident that we are building the foundation for GM’s long-term success.”

Analysts believe the move was orchestrated to provide clarity on GM’s leadership as it prepares for a public share float, with overseas reports indicating that the company is seeking to raise $US12-16 billion in an initial public offering (IPO).

This would make it the second largest IPO in US history, behind Visa’s $19.7b initial offering in March 2008, and should enable GM to reduce the federal government to minority ownership. Last July, the Obama administration bailed out the bankrupt company to the tune of $US50 billion.

GM also reported overnight its second quarter 2010 financial results, which included revenue of $US33.2 billion ($A37b) and net income of $US1.3 billion ($A1.4b). Q2 earnings for the period before interest and tax (EBIT) were $2.0 billion ($A2.2).

GM North America recorded earnings of $US1.6b, up from $1.2b in the first quarter, while GM Europe had a loss before interest and taxes of $US200 million, an improvement of $US300m from Q1.

GM International Operations, which includes Asia and Australia, posted EBIT of $US700m, down from $US1.2 billion in Q1.

Included in GM’s financial results was a gain of $US123 million as a result of the sale of Saab to Spyker Cars.

Chief financial officer Chris Liddell, the former Microsoft CFO who was appointed to the top financial role at GM last December, said he was “pleased with our progress”.

“We have delivered strong product, maintained cost discipline, progressed strategic initiatives such as restructuring Europe and acquiring AmeriCredit, and delivered two consecutive quarters of profitability and positive cash flow,” he said.

Mr Whitacre added: “Results like these make it clear that the new GM is on the right track with good momentum behind us and a bright future ahead of us.

“And also it gives me a lot of confidence to begin transitioning in new leadership at General Motors.”

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