GMC Reports a Third-Year Loss

Posted on November 7, 2007 by LCT Staff - Also by this author - About the author

DETROIT — General Motors Corp. recently reported a record $39 billion quarterly loss after three money-losing years forced the company to write down the value of future tax benefits.

The loss, excluding the tax write-down, was $2.80 a share, more than 12 times analysts' estimates. Mortgage-related losses at GM's partly owned finance unit overwhelmed auto sales that were the highest ever. GM shares fell 5%, giving the Detroit-based automaker a market value of $19.4 billion, about half the size of the third-quarter loss.

GM signaled that it won't generate enough earnings to use the benefits. CEO Rick Wagoner cited concerns about defaults on subprime mortgage loans at GMAC LLC and auto sales in the U.S. and Germany. Slumping U.S. sales in the past half year “feel like the conditions we're going to face,” Wagoner said.

“This all suggests that GM thinks that things are so ugly out there that they can't see the possibility of profitability for many quarters, maybe even years,' Bradley Rubin, an analyst with BNP Paribas in New York, said in an interview.

GM had a net deficit of $757 million related to its 49% holding in GMAC, which posted a $1.6 billion third-quarter loss on Nov. 1 because of mortgage losses at the Residential Capital LLC unit. GM sold the majority stake in GMAC last year to a group led by Cerberus Capital Management LP.

GM's loss of $68.85 per share, the fourth-largest quarterly loss among S&P 500 companies since 1990, widened from a deficit of $147 million, or 26 cents, a year earlier. The non-cash charge of $38.6 billion is related to deferred tax assets in the U.S., Canada, and Germany, the automaker said in a statement.

The results also reflected an after-tax gain of $3.5 billion from the sale of its Allison Transmission unit, $1.6 billion in pension-service costs related to prior labor agreements, and $350 million in charges connected to its bankrupt former partsmaking unit, Delphi Corp.

GM's automotive revenue rose 8.7% to $43.1 billion, a third-quarter record, and automotive operations excluding the tax cost had net income of $122 million. The automotive loss a year earlier was $455 million. Auto losses in North America narrowed. About $700 million of GM's adjusted loss of $1.6 billion was also related to the tax changes, CFO Fritz Henderson said on a conference call.

“Most of the decision for the write-off is driven by history, the fact that we've had a three-year cumulative loss,' Wagoner said.

SOURCE: Bloomberg.com

View comments or post a comment on this story. (0 Comments)

More News

NLA Supports, Celebrates Charities At LCT East

Early bird and group discounts end today, so don’t miss your chance to attend this event at the show!

Attention To Detail Sets California Operator Apart

WebXclusive: Millennial operator Aaron Schiff of Ascot Limousine uses his talents to maintain the stellar reputation of his godfather’s company.

Uber's Creepy Drones And Drivers

TNC Travesties Of The Week: The company's marketing techniques prove to be just as aggressive as their independent contractors. 

70 Defining Moments In Luxury Industry History

From the 1970s to the present, check out these incredible events that affect the wider luxury services and products sector. 

Do You Provide Customer Service Or Experience?

Companies may be tempted to stick with the former, but clients can almost immediately notice when the focus isn’t on the latter.

See More News

Facebook Comments ()

Comments (0)

Post a Comment



See More

See More

See More

See More

LCT Store

LCT Magazine - October 2016 $12.95 COVER STORY: * Leverage Tech To Levitate Your Operations * *


Experience the three annual industry events for networking for business, showcasing vehicles and products, and getting the tools for success.

Read About Your Region

What’s Happening Near You?
Click on any state to see the latest industry news and events in that region.

More From The World's Largest Fleet Publisher

Automotive Fleet

The Car and truck fleet and leasing management magazine

Business Fleet

managing 10-50 company vehicles

Fleet Financials

Executive vehicle management

Government Fleet

managing public sector vehicles & equipment



Work Truck Magazine

The number 1 resource for vocational truck fleets

Metro Magazine

Serving the bus and passenger rail industries for more than a century

Schoolbus Fleet

Serving school transportation professionals in the U.S. and Canada

Please sign in or register to .    Close