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Interesting speculation.

Motley Fool

Volvo's Cash-Stash Conundrum

Tuesday August 22, 4:01 pm ET

By Anders Bylund

If you've looked at Volvo's (Nasdaq: VOLV - News) balance sheet lately, you may have noticed a debt-free $4.5 billion lying around, not doing much. Major investors have seen that bulging vault, too, and they're trying to put it to work.

A large hedge fund has bought millions of the company's A shares (the kind that comes with more voting power) over the past week, pushing the share price up by more than 5%. The Swedish financial media is abuzz with speculation about the intentions of the raised stakes, and many observers think that the fund is hoping to force a massive dividend payout. A recent research report from JPMorgan Chase (NYSE: JPM - News) notes that the company could distribute special dividends of as much as 50 billion Swedish kronor, or about $7 billion, but CEO Leif Johansson has other plans for that cash hoard.

Johansson says that the management team is looking for opportunities to use much of that money to expand into markets like China and Russia in a big way through direct acquisitions. He thinks that organic growth will be hard to come by for the next few years, and he's ready to grow the expensive way instead.

The company will consider "anything within its business areas," so anything from trucks and boat engines to heavy construction equipment and airplane engines seems to be fair game. With cash alone, Volvo could afford to look west and buy either Navistar (NYSE: NAV - News) or Oshkosh Trucks (NYSE: OSK - News) -- and nearly both at the same time. Nearly every truck maker save Motley Fool Stock Advisor pick Paccar (Nasdaq: PCAR - News) is within reach. I don't know exactly what opportunities exist to the east, but given Johansson's comments, I expect to hear more about that soon.

So an activist investor wants a juicy one-time payout, while management wants to grow the business instead. I can't say that I'd be disappointed with either outcome, but if you're holding this stock for the long term, then long-term reinvestment in the business is the more attractive option. Accordingly, this Fool is cheering Mr. Johansson every step of the way.

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Wish I had $4.5 Billion just laying around! LOL

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Dear Volvo

Get lost.

Love,

Loyal Mack Fans

Navistar is the last independent Truck mfg here in the USA. All they make is trucks and like I have said before would have been better off if they could have purchased Mack (maybe even Renault). Leave them alone! Leave Oshkosh alone as well. Pedal your cheap crap somewhere else like India or China. I got an idea use some of the money in your deep pockets and give us back the Superliner. Oh and thanks for disembowling Autocar leaving them to sell rebadged White Expiditors. GET LOST YOU GREEDY BA#*$%DS!

Rant over

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It seems to me that Volvo is hellbent on dominating the global market for trucks & heavy equipment.

Like a malignant cancer, it keeps eating up & killing everything it comes in contact with.

Lets just hope that Mack can remain in remission long enough for some outside investors to rescue it, however that's doubtful because Volvo has already "commandeered" the Mack engine plant, & transplanted Volvo designed engines into the 07 Mack models.

What a shame!

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The best investment would be to expand the Mack and Volvo lines both upwards (heavier duty Granites, small to medium switching and passenger locomotives, powered passenger railcars) and downwards (RV and mdium truck chassis). Exporting Macks worldwide instead of considering them an unwanted competitor to Volvo would make sense too. While they're at it. maybe buy up Terberg and use their chassis for the new ultra heavy Granites? If the directors really want to go on a binge, if they borrowed 2 billion to add to their cash horde they could buy up Ford... but the indigestion wouldn't be worth the revenge!

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Sc**w the junk...bring back the 800's!!!

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Some of you guys have a real issue with Volvo and I dont get it. They make a good product. They are also known for a damn good engine. I have no problem with Volvo and Mack sharing engine technolgy. It is smart to distribute the costs of developing a new engine between to comapanies. What would you guys rather have ......no Mack truck.... or Mack truck owned by Volvo. I will go with the second option any day. I think the biggest problem is that alot of you guys are afraid of change. If things didnt change we would still be whippen horses in the morning. I cant wait to get a new set back axle Granite with a MP8 under the hood ordered. Too bad the rest of ya aren't Real die hard mack guys. I will be with thru thick and thin. Brad

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I see your point Brad, and its a good one. I think many people are afraid that Volvo will do to mack, what they did with White trucks. I agree that mack is better off built under volvos name than to not be built at all.

Volvo is a strong company,so thats good thing. I just hope they dont suprise us with "bad news"

I hope the MP8 is as good as some have said. I have heard it compaired to the old maxidynes "can feel the power band" the elec versions of the E7s shure were not known for grunt. I also think it will be a very good move if they put the big HP (600hp?) engine in the mack for the heavy haulers and low boy trucks. 405hp is not huge power that most owner operators look for. dont get me wrong 405hp is plenty for me but there is a market for big hp engines, and mack is completly out of that market currently.

cross my fingers :idunno:

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First off, to survive in the truck building business today you need to build engines, cabs, etc. in 6 figure annual volumes. That means Mack and Volvo will by neccessity have to share some parts.

Second, while I long for the old R model with a 300 Maxidyne with the 6 speed Maxitorque... I'd love to have a 2007 Granite with the 405 horse MP7 Maxidyne!

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Some of you guys have a real issue with Volvo and I dont get it. They make a good product. They are also known for a damn good engine. I have no problem with Volvo and Mack sharing engine technolgy. It is smart to distribute the costs of developing a new engine between to comapanies. What would you guys rather have ......no Mack truck.... or Mack truck owned by Volvo. I will go with the second option any day. I think the biggest problem is that alot of you guys are afraid of change. If things didnt change we would still be whippen horses in the morning. I cant wait to get a new set back axle Granite with a MP8 under the hood ordered. Too bad the rest of ya aren't Real die hard mack guys. I will be with thru thick and thin. Brad

Volvo = P.O.S.

Mack truck owned by Volvo today = no Mack truck tomorrow.

Remember White, Autocar, GMC heavy truck, Akerman excavators, Clark - Michigan loaders, Champion road graders, all of which were "acquired" by Volvo , and subsequently ceased to exist.

I rest my case.

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Some of you guys have a real issue with Volvo and I dont get it. They make a good product. They are also known for a damn good engine. I have no problem with Volvo and Mack sharing engine technolgy. It is smart to distribute the costs of developing a new engine between to comapanies. What would you guys rather have ......no Mack truck.... or Mack truck owned by Volvo. I will go with the second option any day. I think the biggest problem is that alot of you guys are afraid of change. If things didnt change we would still be whippen horses in the morning. I cant wait to get a new set back axle Granite with a MP8 under the hood ordered. Too bad the rest of ya aren't Real die hard mack guys. I will be with thru thick and thin. Brad

I dont hate them for being Volvo or hate Volvo trucks (I like their cabovers). Its like HK said, they aquired allot of big names and eviscerated them until they either no longer existed or reduced them to a shell of their former self (Autocar). As far as I can tell Mack will be around for quite a while. But what happens when Volvo decides its cheaper to have Mack discontinue there drive line components or suspensions? You hear that the Volvo T-Ride suspension is now offerd by Mack for refuse applications? Not a bad thing but what happens when some Volvo bean counter says heck with camelback when we can just substitute it with M-ride. Then the next thing you know their transmissions get substituted with Volvo trannys. Then what is Mack...answer a Volvo with a dog on the hood. Dont think it will happen? Guess again, its happening already. Its only a matter of time. I could be very wrong but look at history, it tends to repeat itself. I just hope I am wrong.

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Here's the business realities:

1) Macks have to be price competitive with their competitors to sell- If a Mack costs more than 10% above the price of a International/Sterling/Frightliner it won't sell and volumes will drop even further.

2) You need volumes to compete in this business- Mack's 30,000 a year isn't enough. By sharing components with Volvo the volumes rise into the 100,000+ a year range needed to be competitive.

While the Mack axles, trannies, and bogie are safe get ready for a Mack with the Volvo cab- the contract with Mayflower for the conventional cabs will run out in a few years. And before you old timers blow a gasket about a Volvo cab on a Mack, keep in mind that virtually every cab mounted on a Mack chassis for over a decade now came from outside suppliers... the same outside suppliers that build cabs for International, Sterling, etc.. So a Volvo cab that meets the Swedish cab safety standards will be an upgrade!

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As HK Trucking said, Just one look at the newer Autocars and one does not have to be a brain surgeon to see how bad Volvo destroyed a proud and tough line of American trucks. I used to drive a 1969 A-car 10 wheel dump in construction when i was younger and learning the trade. It was ugly,old,noisey, uncomfortable but it was a bullet proof truck for heavy construction. If I was into the large scale construction biz thats all i would have is old A-cars and Macks. The little Cummins 250 with a 5x4 trans was awesome. If just some of the brianinaks at Volvo would realize that America needs a tough truck for construction and vocational applications and screw emissions and cheap foreign components I personally would pay the extra price tag than put up with years of break downs and huge repair bills and frustration of plastic junk trucks. Well, Enough of my ranting. Just my two cents. E.S.D. :chili:

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As HK Trucking said, Just one look at the newer Autocars and one does not have to be a brain surgeon to see how bad Volvo destroyed a proud and tough line of American trucks. I used to drive a 1969 A-car 10 wheel dump in construction when i was younger and learning the trade. It was ugly,old,noisey, uncomfortable but it was a bullet proof truck for heavy construction. If I was into the large scale construction biz thats all i would have is old A-cars and Macks. The little Cummins 250 with a 5x4 trans was awesome. If just some of the brianinaks at Volvo would realize that America needs a tough truck for construction and vocational applications and screw emissions and cheap foreign components I personally would pay the extra price tag than put up with years of break downs and huge repair bills and frustration of plastic junk trucks. Well, Enough of my ranting. Just my two cents. E.S.D. :chili:

Actually, Volvo sold off the AutoCar name to Grand Vehicle Works. Here is a little history on AutoCar:

http://www.autocartruck.com/history.asp

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Did Volvo really "sell" the Autocar name? As part of the FTC approval of the Volvo-Mack merger, either the Xpeditor or the Mack MR had to be divested. Between the two the combined company would have had about a 95% market share. You can bet Volvo still has an interest in the Xpeditor and Autocar name.

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in the words of RHETT ATKINS VOLVO CAN KISS MY COUNTRY A$$ i miss the old DC/DK Autocar (squrefenders & butterflyhood) man they was tough ole trucks (2 of the best dumptrucks we had next to our :bulldog1: 's) wish they would bring back a conventail truck after what the greddy bas****s done to the A-CAR also The greedy bas****s bought one the best motor graders around (Champion) & rebadged it w/ there name on it :angry: im not a big fan of the Navistar I.H But leave them & OSHKOSH alone its bad enough that they own MY BELOVED :mack1: CUZ EVEN THEY ARE LOOKING TOO MUCH LIKE A DA** VOLVO ( IMOP)

The 1st rubber tire loader i learned to operate was 35 Clark-MIchigan w/ a 353 Detroit & 2 yard bucket ya it was a loud machine but i iliked it better than the new VOLVO POS THAT THEY HAVE NOW Who's NEXT? CAT ? DEERE ? Only time will tell who the sweds will suck up like a vaccum cleaner next

oh & HK PREACH ON , PREACH ON ;):thumb:

JUST MY 2 CENTS & Have a goodone B)

LATER

Bulldog (aka :mack1: )

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get ready for a Mack with the Volvo cab- the contract with Mayflower for the conventional cabs will run out in a -_- few years.

God please tell me they won't use that damn ugly Volvo dash.

So a Volvo cab that meets the Swedish cab safety standards will be an upgrade!

Yay -_- . I have said it before and I will say it again. I like the styling of the Volvo cab BUT it doesent belong on a Mack. It reminds me of what happend to Hayes and Brockway after Mack bought them. Its like its payback or something :blink::pat: Hopefully the mutilation stops after that but again wishful thinking.

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Did Volvo really "sell" the Autocar name? As part of the FTC approval of the Volvo-Mack merger, either the Xpeditor or the Mack MR had to be divested. Between the two the combined company would have had about a 95% market share. You can bet Volvo still has an interest in the Xpeditor and Autocar name.

Volvo sold the Xpeditor and Autocar name. For a year until Grand Vehicle Works was ready the Xpeditor was made in New River Valley. The VHD is currently on the old Xpeditor line. The MR and LU rule the refuse business so they couldn't get rid of that, Mack has around 80% market share.

Who knows who owns Autocar? The Carlyle Group owns Grand Vehicle Works who owns Autocar.

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I can tell you I just bought another truck to haul coal in and it had to be a Mack and it had to be pre-98.

As far as what we'd rather see...Mack is disappearing right in front of our own eyes...

Volvo=Cancer

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I can tell you I just bought another truck to haul coal in and it had to be a Mack and it had to be pre-98.

I miss your point. Why do you avoid 1999 Macks. That was before Volvo had anything to do with Mack. Why don't you just avoid Advantage chassis and MP7 engines?

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