This is a partial transcript from Your World with Neil Cavuto, April 16, 2002. Click here for complete access to all of Neil Cavuto's CEO interviews.
NEIL CAVUTO, HOST: They're just revved up at General Motors (GM). The once stodgy auto giant reporting anything but stodgy quarterly results today. Earnings up 146 percent, handily beating even the most bullish estimates, enough to propel an already pumped-up stock into overdrive.
What's behind the move? What if I told you letting people get out of their GM leases early and lease new GM cars? That was CFO John Devine's idea, and he told me he's happy it paid off.
JOHN DEVINE, CFO, GENERAL MOTORS: I don't think you can ever spoil consumers, not in this market. You got to treat them very well. Now, what they're looking for is a great product. They're looking at an affordable product, and frankly a product they can really get excited about.
And what we're trying to do at General Motors is obviously make it affordable, but also get our products that really excite and delight our consumers. And we're beginning to get real attraction there. That's making a difference.
CAVUTO: All right. You're getting attraction when the old big three are not. And there is concern now that maybe hard times for the industry if you do not offer rebates, if you don't offer incentives. Is it still like that?
DEVINE: Well, I think the rebates get a lot of visibility, and God knows they are expensive for all of us. But I think the answer is it's a complete picture. You have to look at the products. You have to look at what's coming. You have to look at the incentives, the overall affordability. It really is a complete picture.
And frankly, it is working for us. Our product lineup is strong. It's going to get stronger. We're working on cost reductions to offset the cost of incentives. We're making more money out of this. So it is working for us, and we continue to keep pushing. We all would like to see incentives lower, but they are what they are, and it is a very competitive, tough market. And we don't see that changing in the near term.
CAVUTO: Well, it is still a tough market, certainly for your old haunt, Ford. Do you look at what is going on there and wonder whether that company can even survive?
DEVINE: Well, I cannot give you much comment on Ford. I think we look at all our competitors. We take them all very seriously, and we have to. Certainly, there is a lot of interaction in Detroit, but the real competitive threat for all of us here really as we look east and look at the Japanese. Those worry us.
CAVUTO: Your biggest threat are the Japanese?
DEVINE: Absolutely. No question.
CAVUTO: Bigger look at just the economy right now. The market goes in fits and starts, as you know, but there does to seem to be some angst about what is going on in the Middle East and the effect of higher oil price, higher gas prices. It's going to effect the airline industry. It's going to affect the auto industry. What do you say?
DEVINE: Well, this has been something we have been worrying about for some time. It comes and goes. We will deal with it if it happens, obviously, as we have in the past.
Fuel prices have been up a couple of years ago, frankly, and the volume was still pretty good. So, again, there's a lot of threats out there. We take them all seriously. But when you stand back and look at the overall business, pretty good quarter. We think we can continue that momentum. We're taking our overall earnings outlook up for the year from $3.50 to $5 a share. So we think, overall, we are going to perform well.
CAVUTO: John, if you don't mind my switching gears here, I would like to get an update from you on the DirecTV situation. More to the point, the possibility of EchoStar not getting DirecTV. If that happens, what do you do?
DEVINE: Well, first of all, we are focused on getting the deal that's on the table done and working very hard to do that. Part of that is to make sure DirecTV performs well. And you might have seen the report yesterday that good revenue growth at the corporate level as well as on DirecTV, and that's a very large help. We still think we can get it done. That is the game plan. We're working very hard to get it done. We probably wont know that for sure until end of the year.
CAVUTO: Until the end of the year?
DEVINE: Yes, toward the end of year.
CAVUTO: If it does not go through, John, do you just have to revisit Rupert Murdoch or what?
DEVINE: Well, we aren't going to talk about what we are going to do. The focus right now is getting this deal done, making Hughes healthy, making it work. And that's our game plan right now.
CAVUTO: Are you afraid in the interim though, John, that DirecTV kind of hangs on the tenterhooks here and that Charlie Ergen, even if he doesn't get it, has so depleted it that he comes out a winner either way?
DEVINE: There is nothing that's going on now that, frankly, we did not anticipate when we announced the EchoStar use deal. There is a lot of media play. There's a lot of questions. That is pretty much the way we decided it was going to happen.
The reason we did it, because we thought this was the best deal for shareholders, for EchoStar, for Hughes and for General Motors. We still think it is the best deal out there and we're focused on getting it done.
CAVUTO: All right. John Devine of General Motors.
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