Tuesday, February 20, 2007

GM/Chrysler and Sirius/XM: Market Leaders Merge

GM is in talks to buy Chrysler according to Automotive News and Sirius is merging with XM Radio. However, this has many people wondering why? Neither GM/Chrysler and Sirius/XM Radio are in position to become bigger through mergers. In fact, Sheldon Liber at www.bloggingstocks says, "Why would General Motors (NYSE: GM) consider buying DaimlerChrysler AG's (NYSE:DCX) Chrysler unit? Is GM lacking scale? Has anyone accused it of not being big enough or broad enough? Hasn't it already acquired many brands over the years and still run up against superior Japanese and German manufacturers? Will acquiring Chrysler help rebuild its own brand? Does GM need Chrysler? The obvious answer is no, it does not. What GM needs is better car design, improved and more uniform quality control, sharper focus, better vision, more efficiency, streamlined management structure and less overhead burden. How does Chrysler solve any of these problems? It doesn't!" In addition, Liber feels Sirius and XM Radio have their own problems and that combining forces won't help.

Overall, both GM and XM Radio stock prices rose slightly due to the recent news about acquisitions and mergers. Also, both have seen a considerable rise in buzz.

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