Frayed Nerves: Is Porsche an automaker, or a hedge fund?
Some analysts are wondering if Porsche isn't running itself more like the Blackstone Group than as an automaker. The option trades it used last year to take control of Volkswagen netted the German automaker €6.8 billion. The business of selling cars netted Porsche just €1 billion over the same period. And that's not all: Porsche made an additional €392 million trading shares in other companies on the German exchange.This has industry watchers trying to figure out how Porsche is looking to make its money, especially considering that its total stock exposure is €31 billion. Even though Porsche has valued its stake in VW at less than half the current value of VW shares, the concern is that VW shares are overvalued and another industry jolt could drive them below the price Porsche paid. And that has people wondering whether the ensuing writedown would cause the controlling Porsche and Piech familes to lose control of the company or inject personal funds to prop it up.
Beyond those hypothetical concerns, Porsche has the real challenge of refinancing a debt that currently comes due at the end of March. With severely reduced cash flow from actually selling cars, Porsche might be looking at unconventional measures, or even the trading floor, to help it out. But after making jokes at the opening of the Porsche Museum that went 100% over budget, if Porsche CEO Wendelin Wiedeking is nervous about the company's financials, you'd never know it.
[Source: Financial Times]
Reader Comments (Page 1 of 1)
Tango 5:28PM (2/20/2009)
both
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Hugh G 5:31PM (2/20/2009)
Maddoff would be proud!
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BoxerFanatic 5:47PM (2/20/2009)
At least Porsche builds product.
If they are behaving fraudulently, I hope they get prosecuted for that fraud. That is the law.
If this is just envy and vilification pointed toward smart, ethical capitalism, then the detractors can stuff it. Porsche has been profitable, which is kind of the goal for corporate survival, and providing competitive jobs for the purpose of making competitive products. Unfortunately capitalist-bashing has recently become socio-politically popular.
But at least they make mid-engined, manual transmission, flat-6 powered sports cars, which is what I aspire to own one day. People don't have to buy them, but for people who prefer them, thankfully someone builds them, and does it well.
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jsjs 6:28PM (2/20/2009)
Criticism of manipulating the market is quite different from "capitalist bashing" (not saying that this is what Porsche has engaged in).
As long as Porsche played w/in the "rules", it's all fine (the question of whether there needs to be better regulation or enforcement is another matter).
BoxerFanatic 6:39PM (2/20/2009)
But what is "manipulating the market", exactly?
If it is fraud, insider trading, etc... it is already illegal, and should be enforced.
If it is legal behavior, then it is just something other people wish they had thought to do, instead, or specific expression of jealousy and envy, which is the jealous or envious person's problem.
If it is legal, but should be illegal, then that is a legislator's true duty, not fomenting class warfare, and creating welfare states all over the planet. (not only the US is doing that...)
If it is illegal but should be legal, then it needs to be challenged in court, and the law repealed, rescinded, or struck down, as government over-extension, and should be fought for by people with "skin in the game" on that issue.
if legal behavior is immoral, then it is the media's job to let people know how, where, and why it is happening, so that an educated populace can make educated decisions to support or not support that company's products or services.
What else is there? This applies very nearly universally to any person or company that does any business of any kind.
If you behave responsibly and protect your fiscal situation, or vice versa, if you are fiscally irresponsible, and rely on others to bear your consequences via government spending... you are "manipulating markets" that affect you.
You have to be much more specific as to what you mean by "manipulating markets." How?
Bij 7:02PM (2/20/2009)
Some say the Stig is Warren Buffet :)
compy386 10:19PM (2/20/2009)
I don't really know German law but if Porsche did what it did in the US there would be people in jail. It's against the law in the US to slowly accrue options to purchase shares without proper disclosure. It's price manipulation pure and simple. You're not allowed to build up a secret stash of stuff (in this case VW shares) only to drive up the value of your holdings.
ccdoggy 6:07PM (2/20/2009)
So what if they make money in other places then just selling cars. they are alive and well, doing what they do best. allot of us work jobs we dont like to afford a chance to play, they can afford doing what they like to do. DONT be naive and think other manufacturers are not also trading in the market.
The museum is awesome and dream of seeing it one day, its just money anyways.
IF they are doing something illegal, yes they should be caught and what not. but it dosent sound like they are.
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jsams4131 6:32PM (2/20/2009)
Its neither...its a PHONE Manufacturerrrr
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Zip 6:24PM (2/20/2009)
Every auto makers envy porsche's sucess.
Without Car manufacturing, porsche can make more income.
I don't think porsche will die.
Everybody want porshce, Everybody think porsche as a deam car.
Whoever owned porsche company, its brand remain forever.
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fixitfixitstop 11:10AM (2/21/2009)
I, for one, have never wanted a Porsche.
Bij 6:35PM (2/20/2009)
Interesting how widely and regularly Porsche is discussed and 911 referenced in the motoring world when their share of the world's annual production is so miniscule
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Max 6:39PM (2/20/2009)
Yet I think their brand is getting diluted dangerously.......first the Cayenne, then the Panamera......the Porsche brand is becoming less exclusive every day.
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Kiiks 6:33AM (2/21/2009)
Exclusivity suggests a pricey barrier to entry. Lamborghinis, Ferarris and Rolls for instance, are exclusive. Porsche has historically made more affordable sports cars than many of their upper-crust competitors. $76k will get you in a 911. While that's no meager asking price, that's far more affordable than anything from the three makes I referenced earlier. $46k will get you in a Boxter, which would lend me to think that exclusivity isn't Porsche's niche. The Cayenne, being their lowest-priced model comes in at $45k, not really much more accessible (nor much less exclusive) than the Boxter.
That being said, if you want your Porsche to be the only one of its kind on the block, they also make the GT2.
wushu 9:32PM (2/20/2009)
I suggest Porsche AG starts making cars we want to buy, like a Cayman with the 3.8L engine.
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zamafir 1:08AM (2/21/2009)
Porsche's actually building cars for people who can buy them not enthusiast who'd love to but can't. In our economy it's hard to argue with how they run their company, it's the most profitable car company on earth and one of the best fortified right now.
Shyam 1:29AM (2/21/2009)
porsche...ruling two industries at the same time. there really is no substitute.
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Snix 11:52PM (2/22/2009)
Build benchmark world class sports cars AND make a profit?
Is the rest of the auto industry doing it wrong?
Go Porsche!
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Chris Johnson 7:40PM (2/23/2009)
Porsche's actions were in complete compliance with German securities regulations and laws regarding the accumulation of a controlling position in a publicly traded German company. The people and entities losing money as a result of Porsche's actions were for the most part run by highly educated financial professionals who have the background to understand the risks they were taking and the potential consequences. Shorting stock is very risky even without legal market manipulation. The rich fat cats who lost their shirts shorting Volkswagen stock got what was coming to them.
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chris m 6:41PM (3/10/2009)
hello to all.
i have to agree with chris johnson in regard to what porsche did. porsche is not based in the usa. they are based in germany. they were working within german rules and regulations.
porsche has stated for a while now that their goal was to aquire volkswagen ag. and the reason is obvious to anyone who has been looking at the automotive industry for awhile.
porsche cannot earn enough money to do everything it wants to do. so they formed joint ventures with volkswagen. after all, it was dr. ferdinand porsche who engineered the kdf car (strength through joy) which subsequently became volkswagen.
so all in all, this is for self-preservation of porsche ag by the porsche-piech family. some months back, car magazine interviewed i believe dr. ferry porsche as to why they purchased volkswagen. also the bbc has an article online about it.
regards,
vrmchris
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