The Delphic oracle was the most famous seer of ancient Greece. You can't help but wonder whether investors in today's namesake auto-parts firm could use a few lessons in forward vision. This morning, global auto-parts supplier Delphi (NYSE:DPH) is taking another of its frequent drubbings after letting the Street know that it will be shedding 8,500 jobs and posting some major losses for the upcoming quarter and year.
If you've been paying attention to the auto industry at all, this news from Delphi will not be much of a shocker. We're in an era where GM (NYSE:GM) and Ford (NYSE:F) are so hard up for sales that they just keep cutting prices. Yeah, $7,500 incentives in order to keep sales afloat. "Like a Rock" seems like an apt theme not just for Chevy trucks but for the brainpower in the collective automotive management suite. While a recent, headline-grabbing GM parts deal with China Automotive Systems (NASDAQ:CAAS) and rising commodity prices may make it look like these "industry headwinds" are relatively new, anyone could have seen the problems coming, or at least the potential.
Foolish investors would do well to leave Delphi on their loser list for quite a while. The press release speaks of operating cash flow. That's nice, but it's not where the rubber meets the road, folks. We all know that heavy industries like these have major capital expenditures to contend with, and in Delphi's case, these have a habit or eating up the majority of cash flow, meaning there's nothing left for shareholders to savor. It's no wonder this firm has been a long-term killer for investors, though not quite as bad as former parent GM.
For related Foolishness:
- Is GM + China really worth a daily double?
- Check out GM's noisy desperation.
- GM will even finance your next vehicle at today's rates. Don't make them beg.
Seth Jayson has positions in no firm mentioned.
