Will GM's Big IPO Actually Happen?

Is GM's IPO going DOA?: When General Motors was bailed out last year, its recovery plan was based on achieving at least a 19 percent share of the U.S. market. Here is a report from late 2009:

Oct 15 (Reuters) - General Motors Co's [GM.UL] turnaround plan assumes it can maintain slightly more than 19 percent of the U.S. market, board member Stephen Girsky said on Thursday.

"The public plan is 19 percent and change. That is what everything is being based on," Girsky said during a panel discussion at a conference at Columbia Business School. [E.A.]

Well, the September sales figures are now out, and unless I'm missing something GM's sales of 173,031 out of 959,049 total sales works out to 18.04%--that's 18 percent and no change. That drags the year-to-date total to 18.97%--and falling--by my calculations.

Hmm. GM is currently planning an IPO designed to allow taxpayers to sell at least some of their 61 percent stake in the bailed-out giant. The IPO is one of the things that lets the Obama administration claim the bailout was an "unambiguous success," in the words of former auto mini-czar Steven Rattner.

But isn't it looking increasingly like the IPO is in trouble? I'm not a Wall Street expert, but I can read the papers. The IPO's already been scaled back, apparently, to the point where taxpayers may not unload enough shares to put them under the 50 percent mark. The global economy is iffy. GM has just abruptly switched CEOs . Its balance sheet is "loaded with fluff," according to Bloomberg. Its own IPO documents admit its "internal control over financial reporting are currently not effective." UAW locals are restive. Its Opel subsidiary is a huge potential cash drain. And its U.S. market share is now seemingly below the target level. (A percentage point of share is a big deal in the auto industry.)

I smell Kabuki! Here's the increasingly plausible scenario: The IPO was conveniently scheduled for after the November elections because the White House knew there was a good chance it wouldn't fly. Now they know that with more certainty. But until November 3, the prospect of the big fall sale allows Obama to portray the bailout as on track, minimizing voter disapproval of one of his most unpopular actions.

After the election, GM will discover that, gee, conditions just aren't ideal, and postpone the whole thing until some later, more auspicious date (which may never come).

The Wall Street Journal is already on to this possibility.

Still, with daily news about the ill financial health of countries from Greece to Ireland to Ecuador, U.S. taxpayers may have to be content to hold onto Government Motors a little longer.

How much longer does everybody else have to act as if the fall IPO isn't nailed to the perch?... 5:49 p.m.