If Rick Wagoner and the GM Board were honorable men then they would resign for incompetence and quit making excuse after excuse after excuse.
GM posts $15.5 billion loss
The automaker lost $27.33 per share in the quarter, compared to a profit of $784 million, or $1.37 per share, a year ago.
On an adjusted basis, GM posted a net loss of $6.3 billion, or $11.21 per share, compared with net income from continuing operations of $1.3 billion, or $2.29 per share, in the same period last year.
GM (GM, Fortune 500) stock fell 7% in pre-market trading.
The automaker posted revenue of $38.2 billion, down from $46.7 billion a year ago.
Analysts polled by Thomson Reuters were expecting revenue of $44.6 billion, although it wasn't immediately clear if the two were comparable.
In a press release, GM said its results were impacted by $9.1 billion of predominantly non-cash special items.
It named strikes, labor cutbacks, and actions to reduce vehicle output as main reasons for the loss.
GM Posts $15.5 Billion Loss on Lease Costs, U.S. Sales Slump
The deficit of $27.33 a share marks GM's fourth straight quarterly loss and compares with a profit of $891 million, or $1.56, a year earlier. Sales fell 18 percent to $38.2 billion, the Detroit-based automaker said in a statement today.
The mounting losses are siphoning resources Chief Executive Officer Rick Wagoner, 55, needs to develop fuel-saving cars to replace the pickup trucks and sport-utility vehicles being abandoned by U.S. buyers. Wagoner, now in his 9th year as CEO, won't project when GM will restore profit as he cuts costs by an additional $9 billion annually and carries out a plan to boost cash by as much as $17 billion.
``The trends that are out of their control, those are the things that have the potential to overwhelm them,'' Robert Schulz, a debt analyst at Standard & Poor's, said yesterday. He was referring to record gasoline prices that have transformed consumer behavior while a weakened U.S. economy drains auto sales to 15-year lows. ``We don't see the macro environment anywhere near on the mend,'' Schulz said.
GM's U.S. sales dropped 16 percent through June. Analysts surveyed by Bloomberg expect the automaker to report a decline in that range when July results are released today.
Rating Cut
S&P yesterday cut GM's credit rating one level to B-, or six steps below investment grade, because falling U.S. sales are causing the automaker to use more cash than anticipated. With the U.S. auto slump expected to carry into next year, GM faces a risk of further cuts, Schulz said. GM had the highest rating, AAA, from 1953 until 1981.
Excluding costs such as a charge for the attrition program and an adjustment to its reserve for Delphi Corp. considered by GM to be one-time expenses, the loss was $6.3 billion, or $11.21 a share. On that basis, the company was forecast to lose $2.40 a share, the average of 12 analysts surveyed by Bloomberg.
About $1.2 billion of the deficit was related to GM's partly owned GMAC finance unit.
GMAC yesterday reported a $716 million pretax expense for residual-value losses as part of a $2.5 billion second-quarter net loss. GMAC said it was able to reduce that cost because of $1.55 billion that the finance and mortgage company expects to receive from GM through risk-sharing and other agreements and $350 million in payments already made.
GMAC Leases
GMAC said it has $30 billion in North American leases. That includes $12 billion in SUVs and $6 billion in other trucks, vehicle types that are losing sales because of $4 gasoline.
The residual value is what a vehicle is worth when a customer returns it at the end of a lease. The lender's residual losses average $11,000 a vehicle for GM models, GMAC Chief Financial Officer Robert Hull said yesterday.
GM, turning 100 this year, in 2007 reported its largest annual loss, $38.7 billion, after a tax-accounting change. It hasn't posted a profit since 2004.
The biggest quarterly loss, $39 billion in last year's third quarter, topped a $21 billion deficit for an accounting change in the first quarter of 1992.
GM fell 33 cents, or 2.9 percent, to $11.07 in New York Stock Exchange composite trading yesterday. The stock lost 56 percent of its value this year.
Telegraph
The automaker telegraphed today's losses July 15 when it outlined plans to increase liquidity by as much as $17 billion by the end of next year by trimming salary payroll costs 20 percent, delaying some products and scrapping a 25-cent-a-share quarterly dividend.
Eliminating the dividend and an unspecified number of salaried jobs will help GM save $10 billion a year. GM plans to generate $4 billion to $7 billion by selling as yet unidentified assets and borrowing from banks.
The increased cash means the automaker will have enough to operate should U.S. sales fall to 14 million cars and trucks this year and next, lower than analysts expect, Wagoner told employees last month. GM also figures on oil costing $130 to $150 a barrel, compared with $124 currently.
GM has said the three-month walkout at former subsidiary American Axle & Manufacturing Holdings Inc. and a smaller strike at two vehicle plants cut first-half pretax earnings by $2.8 billion.
July auto sales, to be released after noon New York time, will match June's annual selling rate of 13.6 million vehicles, according to a Bloomberg survey of 40 analysts and economists. That was the lowest level since 1993, when the industry was emerging from a recession.
``You can kind of look at July as a preview for the rest of the year,'' S&P's Schulz said. ``We just expect sales to be weak.''