casper
11-16-2009, 09:25 PM
GM posts loss, vows to repay U.S. debt early
By Kevin Krolicki and David Bailey
DETROIT - General Motors Co posted a quarterly loss on Monday but said stabilizing sales since its bankruptcy would allow it to begin paying down $8.1 billion in debt to the United States and Canada next month.
GM said it expected to repay its government debt by the end of 2011 and could opt to move faster by refunding money left over in an account created by the Obama administration to finance GM's fast-track sale out of bankruptcy in July.
Analysts said GM's third-quarter results underscored the pressure facing the largest U.S. automaker despite sharply lower debt and operating costs and a $50 billion financing package that has made the U.S. government a 61-percent owner.
"They are still on life support as a business and they are going to continue to be," said Mirko Mikelic, a portfolio manager at Fifth Third Bank in Grand Rapids, Michigan.
GM's third-quarter sales dropped 26 percent to $28 billion. It posted a net loss of $1.2 billion for the period from its July 10 bankruptcy emergence to the end of September.
"There are some signs of stability," Chief Executive Fritz Henderson said. "But when you come away from it, we lost money. It's certainly not satisfactory."
But Henderson also said the financial damage to GM's business from a volatile quarter that saw it transferred to U.S. government ownership had been less damaging than feared.
Henderson's predecessor, Rick Wagoner, was asked to step down by the White House after resisting plans for a bankruptcy that GM had long argued would hurt consumer confidence.
"The underlying business, relative to the projections that we had going into bankruptcy, has actually performed better," Henderson said.
'SURPRISING' AND 'DISAPPOINTING'
Bolstered by its bailout, GM ended September with almost $43 billion in cash compared with $14 billion a year earlier.
That included $17.4 billion in a special account created with bankruptcy financing provided by the U.S. government. GM said it had allocated $8.1 billion from that taxpayer-funded account to pay down its government debt.
GM's results were not prepared according to generally accepted accounting principles and were not comparable to past results. GM has lost $88 billion since 2005.
The company's global share of auto sales slipped to 11.9 percent in the third quarter compared with 13 percent a year earlier. In the United States, where the "cash for clunkers" sales incentives helped lift a sagging market, GM's U.S. share slipped to 19.5 percent from 24.3 percent a year earlier.
Aaron Bragman, an analyst with IHS Global Insight, called the GM results "surprising and a little disappointing."
By Kevin Krolicki and David Bailey
DETROIT - General Motors Co posted a quarterly loss on Monday but said stabilizing sales since its bankruptcy would allow it to begin paying down $8.1 billion in debt to the United States and Canada next month.
GM said it expected to repay its government debt by the end of 2011 and could opt to move faster by refunding money left over in an account created by the Obama administration to finance GM's fast-track sale out of bankruptcy in July.
Analysts said GM's third-quarter results underscored the pressure facing the largest U.S. automaker despite sharply lower debt and operating costs and a $50 billion financing package that has made the U.S. government a 61-percent owner.
"They are still on life support as a business and they are going to continue to be," said Mirko Mikelic, a portfolio manager at Fifth Third Bank in Grand Rapids, Michigan.
GM's third-quarter sales dropped 26 percent to $28 billion. It posted a net loss of $1.2 billion for the period from its July 10 bankruptcy emergence to the end of September.
"There are some signs of stability," Chief Executive Fritz Henderson said. "But when you come away from it, we lost money. It's certainly not satisfactory."
But Henderson also said the financial damage to GM's business from a volatile quarter that saw it transferred to U.S. government ownership had been less damaging than feared.
Henderson's predecessor, Rick Wagoner, was asked to step down by the White House after resisting plans for a bankruptcy that GM had long argued would hurt consumer confidence.
"The underlying business, relative to the projections that we had going into bankruptcy, has actually performed better," Henderson said.
'SURPRISING' AND 'DISAPPOINTING'
Bolstered by its bailout, GM ended September with almost $43 billion in cash compared with $14 billion a year earlier.
That included $17.4 billion in a special account created with bankruptcy financing provided by the U.S. government. GM said it had allocated $8.1 billion from that taxpayer-funded account to pay down its government debt.
GM's results were not prepared according to generally accepted accounting principles and were not comparable to past results. GM has lost $88 billion since 2005.
The company's global share of auto sales slipped to 11.9 percent in the third quarter compared with 13 percent a year earlier. In the United States, where the "cash for clunkers" sales incentives helped lift a sagging market, GM's U.S. share slipped to 19.5 percent from 24.3 percent a year earlier.
Aaron Bragman, an analyst with IHS Global Insight, called the GM results "surprising and a little disappointing."