American Axle (NYSE: AXL) News - Going Away Concern

By The Greek - Economy & Markets:

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Blowing an axle is a hard core problem you never want to face, trust me. No, I never drove a big rig, but I love the truckers! Keep on honking boys as you pass 81st and 1st... I hear ya! Same goes for the barge pilots who cruise the East River daily... In case you're wondering, surveys show these two groups make up my largest fan base, right after Greek diner operators. Keep on honking fellas! Also, this ensures I'll always have a discrete way of escape en route to Canada.

To the point! American Axle and Manufacturing Holdings (NYSE: AXL) had some lousy news today (blew the axle...). AXL's auditors did something auditors didn't use to do back in the good old Enron and Worldcom days; they performed an honest audit. AXL's auditor included a "going concern" statement in the note, a.k.a. the kiss of death. However, considering that AXL's condition has been well understood for some time now, due to its dependence on General Motors (NYSE: GM - 3/4 of AXL's '08 sales) and Chrysler, the stock was actually up 6.6% as I tapped the keys here today. Hold on though, 6.6% in AXL terms means a nickel.

In case you were lost in Zimbabwe for the entirety of the past week, GM also received one of those nasty notes recently, and even though it was expected, it still grabbed mega media space. GM had to make up some bullsh_t press release about not needing a couple billion in March to try to restore investor sentiment (while hand-in-hand with Chrysler in approaching the government for another $22 billion). Oh, and by "investor," I mean the one fool who still owns the shares, and my condolences to all the employees with stock or options. I really do feel for you guys, and I hope you now you understand why I encouraged the UAW to work with management in keeping these companies afloat... and by "encourage," I mean take a pay cut and keep your job, house, car, wife and life... It takes trading some pride and a few of the good things in life, but it beats the other option doesn't it?

Sometimes folks get upset with me when I write like that, and I can understand why you might. Listen, I'm sorry for sounding harsh about serious life issues that matter to every auto industry reader. I'm speaking your language from eye level though, but you'll have to take my word on that. I'm just trying to tell you what I think is best in as light a way as possible. I really do feel for you, trust me on that one. I'll do what I can to help, so if you have some solid suggestions that only an industry insider might know, pass it along and we'll get some eyes on it. A lot of folks do not know about all the cost and trade advantages the foreign producers have, and they naively call for UAW action. When I do it, I do it because I see no other option right now.

Axle just posted a fourth quarter loss of $112.1 million. This struggle helps one understand the extent of damage a "big three" bankruptcy could do to broader America. Lear (NYSE: LEA), Visteon (OTC: VSTN.PK) and most of the other suppliers are in the same boat, and we have not even mentioned the dealership risks. The orderly restructurings (read pseudo-bankruptcies) that are now in progress might save the economy a knock-out blow. We're already against the ropes and seeing three of the opponent, so it wouldn't take much more before we hit the canvas. Still, this country is made up of "Rocky" types, and I just can't see us quitting and therefore losing this fight. Keep pushing forward fellas...


Please see our disclosures at the Wall Street Greek website and author bio pages found there. (Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK).