David and Goliath

Disco · Post by **Disco** » Thu May 07, 2009 11:24 am

http://news.bbc.co.uk/2/hi/business/8036748.stm

amazing stuff.

gridgway · Post by **gridgway** » Thu May 07, 2009 1:05 pm

so who can name the 9 VW brands...
VW
Skoda
er...

Mr Pharmacist · Post by **Mr Pharmacist** » Thu May 07, 2009 1:15 pm

Seat
erm...

Bertroex · Post by **Bertroex** » Thu May 07, 2009 1:24 pm

Skoda, VW, Audi, Lamborghini, Bentley, Seat, DKW, Wanderer, Horch (latter three not active just like BMW still has the rights to "Riley" etc)

Bert

oldtimer · Post by **oldtimer** » Thu May 07, 2009 1:33 pm

More to the point , how have Porsche run up an enormous debt in the billions as referred to in this news article ? Thought they were the most profitable car maker ?

McDArcy · Post by **McDArcy** » Thu May 07, 2009 2:44 pm

Bugatti.......

veryporky · Post by **veryporky** » Thu May 07, 2009 2:49 pm

oldtimer wrote:More to the point , how have Porsche run up an enormous debt in the billions as referred to in this news article ? Thought they were the most profitable car maker ?

Just what I was wondering. The funds they raised on VW stock ran to billions. Wondering if the BBC article is off the mark or if there is a further twist to the story. The whole thing is a compelling soap for petrol heads and financiers alike.

seawise · Post by **seawise** » Thu May 07, 2009 2:51 pm

easy 8 - volkswagen, audi, skoda, seat, bentley, bugatti, lamborgini and porsche - not sure on the 9th

Mr Pharmacist · Post by **Mr Pharmacist** » Thu May 07, 2009 3:12 pm

seawise wrote:easy 8 - volkswagen, audi, skoda, seat, bentley, bugatti, lamborgini and porsche - not sure on the 9th

they don't own Porsche - Porsche own them!

sjm · Post by **sjm** » Thu May 07, 2009 3:25 pm

Interesting story this - it's been in the FT quite a bit over last month. From one article last week...

"Porsche has reaped huge profits in the past years from controversial VW option trades. It made €6.8bn, more than double its revenue, from its VW takeover in the past six months alone. However, analysts said most of these profits were paper gains and could not be easily converted into cash. "

"By agreeing to a merger, Porsche and its family shareholders have implicitly admitted that, with debts mounting, they overreached themselves by trying to acquire a much larger company."

Hey ho!

Timbob · Post by **Timbob** » Thu May 07, 2009 4:01 pm

Have to admit not being neutral on this as it has cost me money BUT, Porsche in my view are having their comeuppance.

A lot (almost all) of the recent "profits" were paper profits on shares and options they held in VW. The price of VW was being driven up by speculation of a takeover by Porsche, causing more "profits" for Porsche. (see the circular logic / loop?)

In the process they bought a lot of VW shares at inflated prices which are now debt financed. Porsche's balance sheet is thus extremely stretched and they will need a capital injection to repay at least some of this debt. (See http://www.businessweek.com/globalbiz/c ... l+business )

Wiedeking (Porsche CEO) once boasted that he had such a clever CFO (FD) he could make lots of money without even selling cars. (And he did for years by speculating on the Dollar / Euro exchange rate.) He then concocted this grand takeover plan with VW but I think he has overreached himself this time.

Not clear how it will all pan out but the Porsche brand will be owned by VW, and Porsche are in major debt (without enough cashflow to service it).

Like I said I am biased, but thats my view on the subject!

seawise · Post by **seawise** » Thu May 07, 2009 4:59 pm

Timbob wrote:Have to admit not being neutral on this as it has cost me money BUT, Porsche in my view are having their comeuppance.

A lot (almost all) of the recent "profits" were paper profits on shares and options they held in VW. The price of VW was being driven up by speculation of a takeover by Porsche, causing more "profits" for Porsche. (see the circular logic / loop?)

In the process they bought a lot of VW shares at inflated prices which are now debt financed. Porsche's balance sheet is thus extremely stretched and they will need a capital injection to repay at least some of this debt. (See http://www.businessweek.com/globalbiz/c ... l+business )

Wiedeking (Porsche CEO) once boasted that he had such a clever CFO (FD) he could make lots of money without even selling cars. (And he did for years by speculating on the Dollar / Euro exchange rate.) He then concocted this grand takeover plan with VW but I think he has overreached himself this time.

Not clear how it will all pan out but the Porsche brand will be owned by VW, and Porsche are in major debt (without enough cashflow to service it).

Like I said I am biased, but thats my view on the subject!

nicely summed up - yes they have got egg on their face now. they have lost focus of their core business, overstretched themselves with creative accountancy and now the tale has almost come to an end with Wiedeking and his CFO looking rather foolish.

left4dead · Post by **left4dead** » Thu May 07, 2009 5:24 pm

My God, this is all starting to sound like an Enron style debarcle