SAN
FRANCISCO - General Motors Corp. shares dropped almost
11 percent Thursday, touching lows not seen in decades
after Goldman Sachs told its clients to unload their
positions in the face of the deteriorating automotive
climate.
GM's
stock, a component of the Dow Jones Industrial
Average, finished down $1.38 at $11.43. In the past
year, the shares have lost almost 70 percent of their
value to lead all declines among major automakers.
Goldman
cut its rating on GM to sell from neutral and lowered
its price target to $11 from $19, saying deteriorating
market fundamentals could exacerbate liquidity
concerns.
"We
think GM's automotive cash flow burn this year and
next is likely to lead it to look to raise capital,
which we believe could lead to significant shareholder
dilution and/or a cut to the company's dividend,"
analyst Patrick Archambault said in a note.
June
sales will likely make matters worse, he said, as
potential customers have steered away from buying new
vehicles, particularly trucks and SUVs, amid surging
gas prices, falling consumer confidence and tightening
credit.
With GM
and the rest of the top automakers struggling to make
sales and keep costs in check, the companies that
supply them with parts are also feeling the impact.
As a
result, Goldman lowered its rating on Lear Corp. to
sell from neutral, citing its disproportionately large
exposure to the big three truck makers. Lear shares
dropped 17.4 percent to $15.15, making for a 58
percent decline in the past year.
Tenneco
Inc. shares joined in the decline, down more than 10
percent to end at $14.600 after Goldman cut them to
neutral from buy.
Archambault
said that while he continues to see the stock as a
core long-term holding with strong earnings and free
cash-flow growth prospects, he believes second-quarter
earnings could miss expectations.
"Our
autos coverage universe has declined significantly,
but we think there is more to go," he said.