GM Hires Morgan Analyst

General Motors Corp., often criticized for packing its top ranks with bean counters instead of automotive specialists, has hired a leading Wall Street auto analyst to help map out its turnaround strategy.

Stephen J. Girsky, who helped lead the auto industry research group at Morgan Stanley, will join GM next month as special advisor to GM Chief Executive Rick Wagoner and Chief Financial Officer John Devine.

“Steve brings an outside perspective that will be valuable,” said GM spokeswoman Toni Simonetti.

The hiring comes in the wake of GM’s $1.1-billion first-quarter loss because of problems in its North American automotive unit and a steady market share decline. In April, Wagoner, 52, assumed direct control of the automaker’s North American operations in an effort to revive sales.

Girsky, in a June 7 report for Morgan Stanley, predicted that GM’s ailing North American operation would have a $4-billion loss this year before taxes.

“GM doesn’t make cars it can sell at a profit, and hiring Girsky won’t fix that,” said Peter Morici, a University of Maryland business professor and longtime GM critic. “Hiring Girsky will do more to better manage Wall Street expectations than to solve GM’s basic problem.”

Others, though, see Girsky’s appointment as a savvy move, provided he can continue to criticize the company freely now that he will be drawing a paycheck from GM. “He will be the insider’s outsider,” said Kent Womack, a finance professor at Dartmouth College.

Girsky, who was rated by Institutional Investor magazine as the nation’s best auto industry analyst for 13 consecutive years, “has been going out and talking to GM’s biggest investors, week after week,” Womack said. “It could be a remarkably astute move to bring in an outsider who understands what investors think about the company” and its failings.

Girsky, 43, worked in GM’s treasurer’s office in the late 1980s before beginning his career as a Wall Street analyst. “The challenge is very clear here,” he said. “The [auto] industry is under stress.”

GM is also struggling with soaring national healthcare costs that are impeding its revival efforts. GM expects to pay almost $5.6 billion for employee and retiree health benefits this year. The company also has acknowledged that it suffers from a weak product mix, uninspiring passenger car designs and a marketwide perception that its vehicles can’t match import brands for quality and reliability.

The automaker has been spending huge sums on incentives to lure customers into its showrooms. But analysts, including Girsky, have suggested that the strategy can provide only a temporary fix. “The longer these programs last, the less successful they will be,” Girsky wrote in a recent note to investors.

GM’s U.S. market share in May, before it began offering employee discounts to all customers, fell to 25.7%, its lowest in 80 years. GM will report its second-quarter earnings Wednesday.

Girsky joins a number of analysts who have left Wall Street in recent years since regulators accused firms of publishing biased research to gain underwriting and merger assignments.

Oracle Corp., the world’s No. 3 software maker, hired Morgan Stanley analyst Chuck Phillips in 2003 to work with CEO Larry Ellison and strengthen customer relations. Phillips is now co-president of Oracle. And former Sanford C. Bernstein & Co. CEO Sallie Krawcheck joined Citigroup in 2002 to create a research and brokerage unit for individual investors.

GM shares fell 23 cents to $36.51 on Monday.

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Times wire services were used in compiling this report.