Still a loser, old GM/New Gm
GM says it lost $4.3B in last half of 2009; sees chance for profit
DETROIT — General Motors says it lost $4.3 billion in the second half of
2009 after its July 10 emergence from bankruptcy, but is sticking to its
promise to pay back U.S. and Canadian government loans by June this year.
Today's release is the first peek into the new GM's post-bankruptcy
financial status. It uses "fresh-start accounting," which allows
companies to revalue their assets after bankruptcy. It can't be compared
with financial statements made before the automaker's bankruptcy filing.
The fresh-start accounting marks an important milestone for the new GM
that needed to occur before the company can issue stock to the public again.
"We are building the foundation that will allow us to return to public
ownership," CFO Chris Liddell said. "Completing fresh-start accounting
is an important step in that process."
The now-private company is 60.1% owned by the U.S. government, which
converted most of its $50 billion in bailout loans to equity. Except for
GM's repayment of the remaining loans — which total $8.1 billion between
the U.S. and Canadian governments — taxpayers won't be able to recover
their money until the company is public and the stock can be sold. GM
executives have said an initial public offering could come as early as
Liddell told analysts and the media on a conference call that he thinks
there's a chance the automaker could be profitable by the end of 2010 —
but he said he didn't want to promise that.
"This company has been guilty in the past of overpromising and
under-delivering," he said. "I would under-promise and hopefully
over-deliver. When we put the runs up on the board, we will come out and
tell you about them."
Still, Liddell says "there's nothing I've seen in the first quarter that
changes my opinion that there is a good chance we'll be profitable this
The company burned through $1.9 billion in operating cash in the last
quarter of 2009, in part because it repaid some of the government loans.
In the second half of 2009, the company generated $1 billion in cash
after it emerged from bankruptcy.
GM will report first-quarter earnings in mid-May.
GM has been working on a turnaround plan that is supposed to allow the
company to break even in a U.S. sales market of just 10 million vehicles
a year. The industry's seasonally adjusted annualized selling rate in
March was 11.78 million vehicles.
GM's results only measure the period from July 10 through Dec. 31.
The company reported revenue of $57.5 billion. That compares with $47.1
billion in revenue from Jan. 1 — July 9. GM said it earned $109 million
in the period from Jan. 1 to July 9, under old accounting.
GM made a $1 billion payment to the government in December and another
$1 billion payment in March.
Under new CEO Ed Whitacre, since July the automaker has shed four brands
— Pontiac, Saturn, Saab and Hummer — made a series of management changes
and cut thousands of salaried employees.
GM, which remains the largest car company by sales in the U.S., saw a
slight gain in U.S. market share the first three months this year
compared with a year ago. Sales of some of its new crossovers, including
the Chevrolet Traverse and Equinox and GMC Acadia and Terrain, have been
GM last reported earnings in November, when it said it lost $1.2 billion
in the third quarter. That was before the company completed the
fresh-start process. It lost $6 billion in the first three months of
2009 before its stay in bankruptcy protection. It lost $31 billion in 2008.
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