Is Toyota in danger of running out of cash by Q4 2010?
By Daniel at 4 February, 2010, 1:54 pm
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“The automaker expects its global recall related to faulty accelerator pedals — and the sales and production suspension that resulted — to cost about $2 billion or 180 billion yen.”
(Forbes)
They are underestimating the cost by a factor of 10.
The recall will likely involve every Toyota made since 2002, and probably cost $20 billion ONCE the software fix is identified.
Failure to find a software flaw can mean the installation of a mechanical kill switch, costing even more.
Price $20 billion in costs, before brand equity, and you have TM’s cash stash dented by at least that much.
(WSJ)
TM is suppose to have $29 billion in cash on hand. However, to effectively run their empire, that company probably need at least $20 billion cash — even before factoring in a global double dip.
So, if this analysis is correct, TM is WAY overpriced at $70.
- LBX
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