IPO Watch: GM CFO Exit and Busted IPO, Bad For Chrysler (GM, F)

General Motors Company (NYSE: GM) did not do its new shareholders much of a favor today by allowing Chris Liddell to resign this soon after the initial public offering.  The former Microsoft Corporation (NASDAQ: CFO) CFO was considered a great asset before, during, and after the Government Motors process.  Treasurer Dan Ammann is replacing Liddell after just over a year with Liddell as CFO.

With a busted price in the post-IPO now being a reality, what does this do for Chrysler and its hopeful IPO?  It hurts it, and it hurts it badly.  Ford Motor Co. (NYSE: F) is a solid number-one by reputation.  GM is number-2, and Chrysler is a distant number-3 to the point that “The Big Three” may now be “The Big Two and a Half.”  GM generated $135.5 billion in 2010 revenues versus $128.9 billion from Ford, but Ford still has a slightly better market cap and a much better brand name in the post-bailout world.

There are two issues that holders now have to consider in the immediate term.  GM is now trading as a busted IPO.  The November-2010 IPO priced at $33.00 per share and today the shares are trading down over 2% at $31.56.  Frankly, the news of a CFO can be worse than this is acting so maybe everyone should be thankful it is still up where it is.  The problem with a busted IPO is that investors hate losing money in initial public offerings and there is a belief that waves of selling come into play after post-IPO companies fall below their offering price.

A second consideration to make is that there were supposedly no financial nor accounting disputes.  Some have noted personality issues in the departure but we have no word of that from the horse’s mouth.  The timing is the issue.  A CFO departure right after an IPO does not even allow the lock-up period expiration shares a chance to get out.  In the next couple of months you may see many new shares in GM come up for sale.  The government has more shares to sell, as do shareholders.

Since the peak earlier this year we have already seen Ford’s shares come down about 25% from the peak.  Now GM is a busted-IPO.  Chrysler is the biggest loser by Chris Liddell’s departure.

JON C. OGG