GM shares hit 62-year lows after broker downgrades

DETROIT (Reuters) - Shares of General Motors Corp (GM.N: Quote, Profile, Research) tumbled 24 percent to 62-year lows on Monday after analysts downgraded the automaker, citing cash levels that may fall below the minimum needed in the first quarter of 2009.

Analysts including Barclays Capital to Credit Suisse also warned that while government aid would decrease the risk of a bankruptcy for the No.1 U.S. automaker, any assistance would come at a significant cost to existing shareholders.

GM and Ford Motor Co (F.N: Quote, Profile, Research) reported far deeper-than-expected quarterly losses on Friday and said their rate of cash burn had accelerated, as an extended slump in car sales raised questions about the future of the U.S. auto industry.

GM burned through $7 billion in cash in the third quarter and warned its cash holdings would fall short of the minimum needed to run its business without new funding or other drastic action.

Barclays cut GM to "underweight" from "equalweight" and lowered its price target for the stock to $1 from $4. It said GM is expected to end 2008 with $13.3 billion in cash and fall below its minimum the $11 billion to $14 billion in cash needs during the first quarter.

That would necessitate a government bailout, which is likely to "significantly dilute GM's equity," Barclays analyst Brian Johnson said in a research note.

Deutsche Bank cut GM to "sell" from "hold" and lowered its equity value to zero from $4, saying GM may not be able to fund its operations beyond December.

GM shares slid $1.05 to $3.32 on the New York Stock Exchange, where it fell as low as $3.02, its lowest since 1946.

GM ended September with $16.2 billion in cash, down from $21 billion at the end of the second quarter. Through the first nine months of 2008, it burned through more than $14 billion.