Rambler Rumble

When worried stockholders of American Motors Corp. met in Detroit last week, they were prepared for bad news about the company, which in fiscal 1956 lost $19.7 million. They were not disappointed. In the first quarter of its fiscal 1957 (October through December), the three-year-old merged hybrid (Nash-Kelvinator-Hudson) piled up a loss of $2,994,613 v. a profit of $2,512,568 in the same period the year before.

But the comparison was not so bad as it seemed. In 1955 the company had made a $7,141,920 profit in the quarter by selling off a large stock interest, and had actually lost $4,629,352 in 1955 from operations, or more than 50% greater than the 1956 loss. Set against this improvement was the fact that overall sales were down from $99.2 million in the first three months of fiscal 1956 to $88.9 million this year. Nash and Hudson had so far sold only 9,166 cars, a 35% sag in volume despite price cuts as deep as $378.

Switch to Diapers? With President George Romney felled by appendicitis, Director Richard E. Cross read a report from Romney, and deployed a management team to parry some pointed criticism. It came from Stockholder Sol A. Dann, a pixyish Detroit attorney who makes management-baiting a hobby, represents only a small number of American's 48,500 shareholders. Dann demanded that American merge with some profit-making company, or liquidate and pay off stockholders. But either choice would mean even bigger losses, said management. The book value of the company would be far less if it were not a going concern. By holding out, American has a chance to make its stock more valuable in any future merger. "Then for God's sake," cried Dann, "get out of the Nash and Hudson market. Why don't you diversify? You can make disposable diapers, as far as we're concerned, just so long as you have the know-how and can make a profit."

Though some Hudson plants are taking on more defense contracts (e.g., B57 assembly), stockholders were told American must keep producing Hudsons for the compelling reason that it cannot yet afford to switch entirely to other lines. To criticism about salaries paid to top officers, management noted that American managers received an average $48,511 from Hudson and Nash-Kelvinator before the merger, now average $32,981.

Sales Increase Ahead. On the whole, the news was not all black. Kelvinator refrigerator sales rose 8.5% in 1956 v. an all-industry slide of 11%. The Rambler, on which Romney is betting heavily, has sold well through the first four months of fiscal 1957, when sales rose 40.8% to a record 23,183. To turn a profit, said Vice President Roy D. Chapin Jr., "a reasonable increase in sales is all we need. We believe we can see that increase coming if we hold fast to our objectives."

At meeting's end, stockholders were not entirely convinced, but they went home peacefully enough. On Dangerous Dann's only possible voting challenge--a resolution concerning location of future annual meetings--management used its 76% control of proxies to squash the dissident with a vote of 3,221,979 to 303,536.

This file is automatically generated by a robot program, so reader's discretion is required.