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GM reports $2.5bn Q3 loss

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http://timesofindia.indiatimes.com/GM_reports_25bn_Q3_loss_says_running_out_of_cash/articleshow/3687103.cms?TOI_latestnews

GM reports $2.5bn Q3 loss, says running out of cash

7 Nov 2008, 2326 hrs IST, AP

DETROIT: General Motors Corp. said on

Friday it lost $2.5 billion in the third quarter and warned that it could run

out of cash in 2009 if the US

economic slump continues and it doesn't get

government aid.

GM also said it has suspended talks to acquire

Chrysler. While it didn't specifically name the automaker, GM said it was

setting aside considerations for a "strategic acquisition."

"While

the acquisition could potentially have provided significant benefits, the

company has concluded that it is more important at the present time to focus on

its immediate liquidity challenges and, accordingly, considerations of such a

transaction as a near-term priority have been set aside," the company's said in

a statement.

The automaker said its cash burn for the quarter

accelerated to $6.9 billion, and government aid will be "essential" because of

the slow economy and credit crisis.

The move comes hours after Ford

Motor Co. said it lost $129 million for its third quarter and will cut about

2,260 more white-collar workers in North America as the industry tries to

weather the worst economic downturn in decades. As US and global economies have

rapidly deteriorated, auto sales have nearly shut down.

GM said

government aid is "essential" to help the US auto industry through the

downturn.

"The third quarter was especially challenging for the auto

industry. Consumer spending, which represents close to 70 percent of the US

economy, fell dramatically, and the abrupt closure of credit markets created a

downward spiral in vehicle sales," Chairman and CEO Rick Wagoner said in a

statement.

The automaker reported a net loss of $4.45 per share

during the quarter, compared with a record-setting loss of $39 billion, or

$68.85 per share, a year ago. Its adjust loss was $4.2 billion, or $7.35 a

share, with an adjusted loss of $2.8 billion for its automotive

operations.

Revenue fell to $37.9 billion from $43.7 billion, due

largely to credit freezing across the globe.

The loss exceeded Wall

Street estimates. Analysts surveyed by Thomson Reuters predicted a loss of $3.70

per share on sales of $39.4 billion.

The struggling company announced

it would improve liquidity by $5 billion by the end of next year by cutting

capital spending, reducing sales promotions, and further cutting production in

the first quarter.

The company also suspended its matching

contribution for employee 401K plans, and suspended tuition reimbursement. In

addition, salaried employees will not get incentive pay next year for their work

in 2008, GM said.

GM increased its plan to reduce salaried worker

costs to 30 percent. During the summer, the company announced a 20 percent

cut.

"Even if GM implements the planned operating actions that are

substantially within its control, GM's estimated liquidity during the remainder

of 2008 will approach the minimum amount necessary to operate its business," the

company said in a news release.

"Looking into the first two quarters

of 2009, even with its planned actions, the company's estimated liquidity will

fall significantly short of that amount unless economic and automotive industry

conditions significantly improve" or it receives government funding, the news

release said.

GM said it had $16.2 billion in cash, marketable

securities and readily available assets at the end of September, down $4.8

billion from the $21 billion it reported on June 30.

GM has said in

the past it needs a minimum of $11 billion to $14 billion to run the

company.

GM shares fell 68 cents, or 14 percent, to $4.12 in morning

trading.

The company also said it will slow down assembly line rates

at North American factories beginning next year, but it gave no details. It also

said several vehicle new vehicle programmes would be delayed, but it would spend

more on its Chevrolet Volt electric car and other fuel-efficiency

programmes.

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Good news, for a company that has been focusing on gas guzzlers ever since, this should have happened much before!

I don't have any sympathies with the company, even the other things it has been doing like acquiring Daewoo, don't reflect good about the company.

All 3 Ford, GM & Chrysler should fall & pave way for environment friendly companies.

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