The gambler cashes out, ready for another game

By WARREN BROWN
WASHINGTON POST
EAST PALO ALTO, Calif. -- The wonder is that anyone is surprised. Did anybody expect a boardroom revolution, the toppling of a corporate chairman, the emergence of a grand Franco-American automotive alliance?
Did anyone, even for a moment, really believe that billionaire investor Kirk Kerkorian had the best interests of General Motors, the world's largest car company, or those of its thousands of employees and millions of customers, at heart?
Did anyone truly believe that Kerkorian's Beverly Hills investment company, Tracinda, wanted to make a better car or truck or that it earnestly was committed to the idea of making America more industrially competitive?
I have resisted the temptation to say, "I told you so." But I'm not that strong, especially given Kerkorian's performance in relationship to GM over the past several weeks.
The man and his investment firm did exactly what I said they would do after exploiting the GM board, the media and Wall Street for all they were worth. They sold off their GM stock, collected hundreds of millions of dollars and moved their money elsewhere -- appropriately, into a Las Vegas casino venture, from whence their original billions came.
It was typical Kerkorian-Tracinda behavior.
Bold announcement
They bought into a company, acquiring a nearly 10 percent share of GM. They made bold announcements about management errors, suggesting an incompetence that could be remedied only by the removal of the corporation's existing management team. They then dazzled the media with seemingly pithy announcements about what needed to be done to set things aright. How about cutting operating and production costs and improving products?
Talk about breakthrough thinking! Give those gentlemen a standing ovation, which is largely what the media and Wall Street did, applauding the Kerkorian team for supposedly talking sense to a GM management that didn't want to listen.
It did not matter that GM had started along the path to recovery long before Kerkorian and company began making a fuss. It did not matter that GM's efforts finally were beginning to yield tangible results represented by demonstrably better, highly competitive products, such as those in its revised Saturn line, along with models such as the company's new fleet of pickup trucks and sport-utility vehicles, which are selling well despite wild gyrations in gasoline prices.
Nor did it seem to matter that GM had overhauled its global automotive operations, eliminating an estimated 10.5 billion in redundant product development design, engineering and assembly costs, according to several top GM executives.
The Kerkorian team wanted change. But although it was getting it, the Kerkorian league argued that it wasn't coming fast, or profitably enough. So Kerkorian's people launched a time-consuming, money-wasting and highly distracting scheme to wed GM to France's Renault-Nissan automotive conglomerate, which has been having its own difficulties selling cars and trucks.
That poorly conceived plan failed, but not before boosting the value of Kerkorian's stock in GM, which I contend was Kerkorian's intent all along.
Greener pastures
In response to that failed merger, Jerome York, Kerkorian's representative on the GM board, resigned. GM's stock prices dipped. But before they could dip to the point of generating losses for Kerkorian, his team cut and ran to more familiar, greener pastures, launching a tender offer to buy 15 million shares of MGM Mirage, a casino and hotel operation in Las Vegas.
I am doubtless a dunce in these matters, a hopeless believer in the better angels of our nature. But I would have had more respect for Kerkorian if he had stayed with GM and worked to help make the company's new, laudable dream a reality.
As announced last week by Richard Wagoner, the GM chairman and chief executive Kerkorian wanted to replace, GM is investing billions of dollars in the development and eventual production of more fuel-efficient cars and trucks, including a variety of electric models.
That is a goal worth pursuing, a gamble worth taking for GM, the nation and the environment.
But it clearly holds little interest for Las Vegas gamblers and their bankers.