General Motors Loses $3.25 Billion During the 1st Quarter of 2008

Discussion in 'OT Driven' started by TriShield, May 1, 2008.

  1. TriShield

    TriShield Super Moderator® Super Moderator

    Joined:
    Jul 6, 2001
    Messages:
    132,822
    Likes Received:
    1,754
    Location:
    PRESIDENTIAL TOWER, GREAT AGAIN, NY
    GM posts $3.25 billion quarterly loss

    Wed Apr 30, 2008 12:56pm EDT

    DETROIT (Reuters) - General Motors Corp (GM.N: Quote, Profile, Research) on Wednesday posted better-than-expected results on strong overseas sales, despite a costly supplier strike, waning demand for its most profitable vehicles and charges related to struggling former subsidiaries.

    GM, whose shares rose nearly 4 percent in pre-market trading, also took a $1.45-billion charge for its remaining investment in finance company GMAC and a $731-million charge for its exposure to the bankruptcy of auto parts supplier and former subsidiary Delphi Corp.

    Weighed down by those charges, GM posted a net loss of $3.25 billion, or $5.74 per share, compared with a profit of $62 million, or 11 cents a share a year-earlier.

    Revenue declined to $42.7 billion from $43.4 billion.

    Excluding one-time items, GM reported a first-quarter loss of $350 million, or a 62 cents per share, a narrower loss than Wall Street had expected.

    On average, analysts had expected GM to post a loss of $1.67 per share before items on revenue of $40.6 billion, according to Reuters Estimates.

    GM Chief Financial Officer Ray Young said analysts may have underestimated the strength of GM's sales from emerging markets and the progress it made in cutting costs in North America.

    "The headline numbers don't look that great, but when you actually peel back the numbers ... I feel the first quarter is very encouraging," Young told reporters.

    Analysts had a mixed reaction to GM's results, including its negative cash flow of $3.8 billion in the quarter.

    "Rationalizations abound, but we are left wondering: where is the bottom in North America?" Calyon Securities Mark Warnsman said in a note. "For a company in turnaround, cash flow is the ultimate test -- a test on which GM is failing to achieve a passing grade."

    But JP Morgan analyst Himanshu Patel said the GM results were "not as bad as feared."

    Some analysts noted that GM shares had been due for a bounce at the first sign of good news, due to a buildup in short positions during a 15 percent slide in the share price since the start of the year. Holders of short positions hope to buy back borrowed shares at a lower price, sometimes leading to a rebound in prices.

    RECOVERY SEEN LESS 'ROBUST'

    GM Chief Financial Officer Ray Young said GM was still forecasting a second-half recovery in U.S. auto sales but now believed the industry turnaround would be weaker than it had expected at the start of the year.

    "We still believe there is going to be a second-half recovery, but probably not as robust as what we had thought at the beginning of the year," he said.

    Lehman Brothers analyst Brian Johnson said he was encouraged by GM's "recognition" of a tougher sales climate in North America and its recent decision to cut planned truck production by 138,000 vehicles in 2008.

    "These cuts will improve GM and hence industry capacity utilization, helping to improve pricing dynamics," he said.

    GM earned $392 million before taxes and items on its auto operations with earnings from Europe, Latin America and Asia combining to outstrip a $611 million loss in North America.

    In its home market, GM has been pressured by a two-month United Auto Workers strike against Detroit-based American Axle & Manufacturing Holdings Inc(AXL.N: Quote, Profile, Research), a major supplier to GM.

    GM said the strike had cost 100,000 units of production and depressed first-quarter results by about $800 million.

    The automaker has shut down or partly idled about 30 plants because of that strike, which has mainly affected production of slower-selling large SUVs and pickup trucks.

    But the strike has also allowed GM to run down inventory sharply and to resist pressure from dealers to offer stepped-up sales incentives. GM's dealer stock hit a 25-year low for April at about 840,000 vehicles at month end.

    "We're trying to manage our overall level of incentive activity, period," said GM President and Chief Operating Officer Fritz Henderson.

    Henderson said GM had not anticipated the spike in oil prices to $120 per barrel or the resulting rapid defection by American consumers away from more expensive trucks.

    "I think we missed that. I think a lot of people did and therefore the change in market mix has happened a lot faster than we thought," Henderson said.

    GM has also struggled with the legacy of its troubled former subsidiaries: Delphi and GMAC.

    GMAC posted a first-quarter loss of $589 million and warned that it might not be profitable again until 2009 because of falling home prices and tight credit markets.

    GM wrote down the value of its investment in GMAC after concluding that the U.S. mortgage market was unlikely to recover in the near term. GM kept a 49-percent stake in GMAC after selling the rest to private equity firm Cerberus Capital Management LPCBS.UL in 2006.

    GM's global vehicle sales fell nearly 1 percent to 2.25 million vehicles in the first quarter, falling far behind rival Toyota Motor Corp (7203.T: Quote, Profile, Research), which sold 2.41 million vehicles.

    GM and Toyota had been roughly even in 2007 for the top spot among the world's automakers in sales volume.

    (Reporting by Kevin Krolicki; Editing by Derek Caney)

    [​IMG]
     
  2. TriShield

    TriShield Super Moderator® Super Moderator

    Joined:
    Jul 6, 2001
    Messages:
    132,822
    Likes Received:
    1,754
    Location:
    PRESIDENTIAL TOWER, GREAT AGAIN, NY
    General Motors Death Watch 175: Phone Calls From the Dead

    [​IMG]

    By Robert Farago
    April 30, 2008
    http://www.thetruthaboutcars.com/

    Dean Radin believes some people are psychic. No surprise there; investigating psychic phenomena is what Radin does for a living. And yet, when author Mary Roach asked the electrical engineer if there's a middle ground between believing that the dead contact the living through electromechanical devices and viewing the whole thing a hoax, Radin said "The middle ground between genuinely true and outright faking is unconscious delusion." Welcome to GM's world.

    I have no doubt that GM CEO Rick Wagoner and his acolytes will face this quarter's $3.25b loss with equanimity. Why not? During the last four years, they've glibly provided every imaginable excuse for GM's inability to book a profit; from "restructuring" costs, to labor buyouts, to the housing crisis and gas prices and beyond. The "turnaround is on course" is burned into their collective unconscious. They murmur reassuring words– to themselves and the outside world– and get back to the business of losing money.

    In reality, there was a time when GM had the financial clout to make a $3.25b quarterly loss look like a right cross to a WWE wrestler's chin. But whether or not Wagoner et al admit it, the automaker's $23.9b supply of cash, marketable securities and other available funds– and that's worldwide folks, not North America– simply isn't enough to see the automaker through the current crisis, or the crisis to come.

    The key point: GM needs to be analyzed for its cash flow, not earnings. This quarter, GM’s direct operating cash flow was negative $3.9b including special items. Total cash flow after non-operating items: negative $3.4b. Speaking to financial analysts, COO Fritz Henderson' tried to compare GM's current cash levels vs. last year's first financial quarter. But that’s irrelevant. All that matters is cash generated vs. cash spent over the last three months. And that’s decidedly negative.

    In fact, GM was only saved from a total C11 meltdown in recent years by asset sales (well north of $10b, maybe as much as $20b). There's no escaping it: GM's business is going up in flames. You can feel the burn at the sharp end.

    Henderson said GM NA's dealer inventory in April is around 840k units, the lowest level since 1983. But Fritz also said dealer stocks of full-size pickup trucks– GM's former cash cow– are still "higher than we'd like." Uh, GM has stopped making pickups (thanks to a strike by American Axle workers). And Toyota is about to pile discounts of the hood of its superabundance of Tundras. And Ford is about to launch the new F-150.

    But it ain't just lost pickup profits plaguing GM. SUV sales have also cratered. In March, GM's truck and SUV sales (combined) dropped 22 percent. Worse still: falling SUV/pickup residuals trap existing GM owners in their current rigs. They can't be turned into repeat buyers to soak-up truck production– should it ever restart in any meaningful fashion.

    Meanwhile, GM has no credible small cars to take up the slack. In a market where B-Class cars are flying off the lot, GM's products come complete with rebates. The automaker has no known programs to develop profitable vehicles in this segment except the Volt– which is (sticking with reality) a non-starter. For traditional domestic car buyers, a resurgent Ford looks set to steal whatever's left of GM's lunch.

    In the financial realm, there's blood all over the carpet. Thanks to bad loans, bad management and a bad economy, GM's former financial powerhouse– car and mortgage lender GMAC– is heading for disaster. In terms of that beleaguered cash pile, GM has announced that it will advance up to $650m to its bankrupt former division Delphi in 2008. At the same time, GM's credit ratings are falling. Will the company lose access to its existing credit facilities?

    As always, Wagoner and GM's camp followers cling to whatever good news they can pull from the wreckage. Today's Bloomberg headline on GM's Q1 loss sets the standard for self-denial: "GM Has Smaller Loss Than Estimated on Overseas Sales." In other words, overseas markets will keep GM afloat. Only, as discussed here many times and explained above, it won't. As TTAC commentator lprocter1982 points out, "GM's international profits, combined, don't equal even a third of their total loss."

    To use the vernacular, stick a fork in GM. It's done. It's all over bar the lawsuits, recriminations, government bail-outs and unfurled golden parachutes. In fact, if GM's management accepted the full reality of the company's situation, they'd file for Chapter 11 now, while the automaker still has enough cash to reinvent itself, before Chapter 7 dissolution.

    Of course, that would mean the end of Rick Wagoner's administration, his $14.4m annual compensation package and the sharp exit of his fantastically well-paid people (e.g. Car Czar Bob Lutz). Could the GM Empire finally be destroyed by unbridled personal greed? In truth, it's a done deal.
     
  3. TriShield

    TriShield Super Moderator® Super Moderator

    Joined:
    Jul 6, 2001
    Messages:
    132,822
    Likes Received:
    1,754
    Location:
    PRESIDENTIAL TOWER, GREAT AGAIN, NY
    ON THE TABLE #443

    April 30, 2008

    [​IMG] [​IMG] [​IMG]GM. The car company that is well on its way to getting its product house in order and the one that's allegedly the best-positioned of all the domestic automakers to emerge from The Darkness, and the company that is thriving everywhere around the world except right here in its home country, hung a net loss of $3.25 billion on the board during the first quarter. Even though the majority of the loss was due to one-time charges relating to its share in the souring GMAC investment (just under $300 million), the American Axle strike ($800 million), and its ongoing problems with Delphi ($731 million), the results stink. Beyond the various charges, the company lost $42 million during the first quarter on total revenue of $42.7 billion. It did deliver a $1 billion dollar gain before taxes in operations around the world, but most disturbing is the fact that GM lost $812 million (before taxes) on revenue of $24.5 billion in its North American vehicle operations. GM can spin this all they want, but it's a heaping, steaming giant bowl of Not Good.

    [​IMG] [​IMG] [​IMG]GM. Publisher's Note: This company continues to dance around the fact that its North American vehicle operations are simply out of touch with the reality of what's going on in this market. With too many models, too many divisions and too many dealers, GM will continue to lose money hand over fist in North America, and it's simply unacceptable at this point. Where is the leadership? Where is the vision? Where is the outrage? When is somebody down at the RenCen going to stand up and say "This ain't working!" What the hell is the so-called board of directors doing and why do they continue to rubber stamp what's going on in GM's North American operations, quarter after quarter after quarter? It's one thing to keep re-aligning GM's divisions here in an attempt to streamline the operating structure because that all sounds good on paper, but unless and until they start cutting divisions, cutting the model overlaps among the divisions and cutting their dealers dramatically, this company will continue to do piss-poorly in the U.S. market. GM resolutely believes that things are going to get better in North America, and that's fine, a little optimism never hurt anyone. But this is ridiculous. Nothing fundamentally has changed that will eventually improve this situation. And I mean n-o-t-h-i-n-g. Dealers are still clamoring for more products so that they can do what, sell against other GM divisions in their local markets? Frickin' brilliant. All the great products in the world aren't going to matter one bit if GM can't do what needs to be done in their home market. At this point what's going on in the North American market lands squarely in the lap of Rick Wagoner. Fix it, Rick, because this situation is getting flat-out embarrassing. If not, then a regime change will be in the offing long before you're ready to retire. - PMD

    [​IMG]
     
  4. Toke

    Toke New Member

    Joined:
    Mar 21, 2008
    Messages:
    118
    Likes Received:
    0
    Funny to see Ford and GM fall victim to their own creation, SUVs. And rightfully so.
     
  5. Kenny Powers

    Kenny Powers OT Supporter

    Joined:
    Jul 20, 2005
    Messages:
    35,631
    Likes Received:
    3,621
    Location:
    TRUMP IS MY PRESIDENT
    :uh:
     
  6. Priest Tango

    Priest Tango Custom User Tits

    Joined:
    Aug 8, 2003
    Messages:
    17,613
    Likes Received:
    0
    Location:
    LOOOOOONG ISLAAAAAAND
    two mpg SUVs are the wavvvveee of the future!!!


    [/lutz]
     
  7. Toxicity

    Toxicity New Member

    Joined:
    Feb 27, 2005
    Messages:
    2,703
    Likes Received:
    0
    Location:
    My av is so small you can't see it!
    Are you two fucking retarded?
     
  8. Toke

    Toke New Member

    Joined:
    Mar 21, 2008
    Messages:
    118
    Likes Received:
    0
    Did you even bother to read the damn article?
     
  9. art_VW_shark

    art_VW_shark OT Supporter

    Joined:
    Oct 23, 2005
    Messages:
    156,760
    Likes Received:
    208
    Location:
    Bosstown
    American auto industry :rofl:
    but they make better cars now :dunno:
     
  10. TriShield

    TriShield Super Moderator® Super Moderator

    Joined:
    Jul 6, 2001
    Messages:
    132,822
    Likes Received:
    1,754
    Location:
    PRESIDENTIAL TOWER, GREAT AGAIN, NY
    GM needs to raise $9 bln over next 2 years: Lehman

    Wednesday May 14, 8:50 am ET

    (Reuters) - General Motors Corp needs to raise about $9 billion over the next two years to refinance debt, and may seek more for operational cash burn as it faces production headwinds and commodity price increases, Lehman Brothers analyst Brian Johnson said.

    GM will need to refinance close to $8.7 billion of debt due between now and January 2010, as well as absorb additional cash burn of close to $11 billion, Johnson said.

    "When we last looked in depth at the GM liquidity position in March, GM credit spreads had spiked close to their widest levels of late 2005 and about 1000 basis points wider than their lowest point in 2007," he said in a note to clients.

    Johnson said as the overall high yield market improved, GM spreads tightened about 300 basis points while rival Ford Motor Co spreads tightened more than 400 basis points, indicating greater relative comfort with Ford's liquidity position.

    Last week, Fitch Ratings said both GM and Ford will continue to face heavy cash drains in 2008 and are likely to burn cash through 2009 unless industry sales rebound.

    GM will likely see its liquidity eroded due to operating losses in the North American market and restructuring costs, Fitch said, adding that the company faces the risk of another ratings downgrade this year.

    GM, which lost a combined $51 billion over the past three years, acknowledged at its annual Banker meeting that it would likely need to seek additional liquidity if selling conditions do not materially rebound in the second half of 2008, Lehman's Johnson said.

    The company also said many of the steps it was taking to reduce risks related to its Residential Capital LLC mortgage unit as well as to auto-parts suppliers Delphi Corp and America Axle & Manufacturing will result in a cash outflow of $1.7 billion this year, Johnson, who maintained his "equal weight" rating and $24 price target on the stock, added.

    Shares of the company closed at $20.20 Tuesday on the New York Stock Exchange.

    [​IMG]
     
  11. CJPA

    CJPA New Member

    Joined:
    Jan 14, 2002
    Messages:
    114,304
    Likes Received:
    0
    Location:
    AZ, USA
    Fortunately this doesn't affect my supply of used Z06s :o
     
  12. Mitchj

    Mitchj OT Supporter

    Joined:
    May 2, 2005
    Messages:
    112,090
    Likes Received:
    81
    eventually GM is going to die down to the basic core operational units. Chevrolet, Caddilac, Hummer and Holden.

    Than when that is all they have they can begin to be profitable again.
     
  13. Kenny Powers

    Kenny Powers OT Supporter

    Joined:
    Jul 20, 2005
    Messages:
    35,631
    Likes Received:
    3,621
    Location:
    TRUMP IS MY PRESIDENT
    Hummer? For how much longer do you think it's going to be cool to ride around in a big plastic box?
     
  14. Mitchj

    Mitchj OT Supporter

    Joined:
    May 2, 2005
    Messages:
    112,090
    Likes Received:
    81
    Niche market.
     
  15. Heimdall

    Heimdall OT Supporter

    Joined:
    Jun 18, 2003
    Messages:
    50,493
    Likes Received:
    103
    they need to pull their finger out.
     
  16. JM Popaleetus

    JM Popaleetus OT Supporter

    Joined:
    Feb 4, 2007
    Messages:
    49,359
    Likes Received:
    33
    Location:
    Connecticut
    What else does GM really need? All their other brands are just remakes of these four companies. Although, I will be :wtc::wtc: if Pontiac goes. Hopefully Pontiac could be sold as a Chevy. And I agree with the other poster, :wtf: at Hummer...
    Hummers only belong in one place, the military. Otherwise all of GM brands are niche markets right now. What do you like better the Pontiac Solstice or the Saturn Sky.
     
  17. Mitchj

    Mitchj OT Supporter

    Joined:
    May 2, 2005
    Messages:
    112,090
    Likes Received:
    81
    i don't live in the states, so i've never driven either.

    But saturn is apparently going badly.
     
  18. JM Popaleetus

    JM Popaleetus OT Supporter

    Joined:
    Feb 4, 2007
    Messages:
    49,359
    Likes Received:
    33
    Location:
    Connecticut
    The point I was making was... Why do you need two of the same cars on two different brands.

    Hence, that is what GM's problem is.
     

Share This Page