Carey Mei
2014-11-01 19:55:02 UTC
Remember. A financial loss is a success according to Paul
Krugman, democrats, and Obamanomics.
General Motors gm posted a $15.5 billion second-quarter loss
Friday, the third-worst quarterly performance in the company's
nearly 100-year history.
The loss came as North American sales plummeted and GM faced
expenses due to labor unrest and a massive restructuring plan
aimed at preserving cash to weather a prolonged U.S. economic
downturn.
The loss of $27.33 a share was in stark contrast to the year-ago
period when GM recorded a net profit of $891 million, or $1.56 a
share.
Revenue for the April-June period was $38.2 billion, down $8.5
billion from a year earlier.
The company said its loss included $9.1 billion in one-time
charges, including $3.3 billion for the buyouts of 19,000 U.S.
hourly workers, most of whom left at the end of June, as well as
$2.8 billion in liabilities related to Delphi, its former parts
division.
It also included $1.3 billion worth of write-offs due to a
reduction in the value of GM's 49% interest in its former
financial arm, GMAC Financial Services.
Additionally, GM took a $2 billion charge to its bottom line
because of huge drops in the value of pickups and sport-utility
vehicles coming back to the company after lease terms end. GMAC
and GM have suffered big losses when they try to sell the now-
unpopular vehicles at depressed prices.
GM also took a $197 million charge related to the settlement of
a nearly three-month strike at supplier American Axle and
Manufacturing Holdings, which hurt production at more than 30 GM
plants. GM agreed to help American Axle fund worker buyouts as
part of the settlement.
Without the one-time charges, GM lost $6.3 billion, or $11.21 a
share. Twelve analysts surveyed by Thomson Financial predicted a
$2.62 a share loss on revenue of $44.57 billion.
GM shares were down 60 cents, or 5.4%, to $10.47 in afternoon
trading after falling nearly 11% earlier in the day.
Ray Young, GM's chief financial officer, said the company burned
through $3.6 billion in cash during the second quarter, which he
attributed largely to reducing the company's inventory by nearly
90,000 vehicles to less than 800,000.
He said GM does not expect a similar reduction in future
quarters, so the cash burn should be smaller for the rest of the
year.
"In that respect, the negative cash flow in the second quarter
is overstated," he said.
So far this year, GM has gone through about $1 billion in cash
per month, including $3.4 billion in the first quarter.
Young said GM had $21 billion in cash and $5 billion available
through credit lines at the end of June for total liquidity of
$26 billion, which he called a strong position. GM already has
announced plans to generate another $15 billion in liquidity in
the next 18 months.
"We're going to get the second quarter behind us and just move
ahead," Young said.
GM's net losses since 2005 total $51.1 billion.
The $15.5 billion loss reported Friday is less than half of GM's
record $39 billion loss in the third quarter of last year. That
loss was due to a charge for accumulated deferred tax credits.
The second-worst loss was $21 billion in the first quarter of
1992.
http://abcnews.go.com/Business/story?id=5503957
Krugman, democrats, and Obamanomics.
General Motors gm posted a $15.5 billion second-quarter loss
Friday, the third-worst quarterly performance in the company's
nearly 100-year history.
The loss came as North American sales plummeted and GM faced
expenses due to labor unrest and a massive restructuring plan
aimed at preserving cash to weather a prolonged U.S. economic
downturn.
The loss of $27.33 a share was in stark contrast to the year-ago
period when GM recorded a net profit of $891 million, or $1.56 a
share.
Revenue for the April-June period was $38.2 billion, down $8.5
billion from a year earlier.
The company said its loss included $9.1 billion in one-time
charges, including $3.3 billion for the buyouts of 19,000 U.S.
hourly workers, most of whom left at the end of June, as well as
$2.8 billion in liabilities related to Delphi, its former parts
division.
It also included $1.3 billion worth of write-offs due to a
reduction in the value of GM's 49% interest in its former
financial arm, GMAC Financial Services.
Additionally, GM took a $2 billion charge to its bottom line
because of huge drops in the value of pickups and sport-utility
vehicles coming back to the company after lease terms end. GMAC
and GM have suffered big losses when they try to sell the now-
unpopular vehicles at depressed prices.
GM also took a $197 million charge related to the settlement of
a nearly three-month strike at supplier American Axle and
Manufacturing Holdings, which hurt production at more than 30 GM
plants. GM agreed to help American Axle fund worker buyouts as
part of the settlement.
Without the one-time charges, GM lost $6.3 billion, or $11.21 a
share. Twelve analysts surveyed by Thomson Financial predicted a
$2.62 a share loss on revenue of $44.57 billion.
GM shares were down 60 cents, or 5.4%, to $10.47 in afternoon
trading after falling nearly 11% earlier in the day.
Ray Young, GM's chief financial officer, said the company burned
through $3.6 billion in cash during the second quarter, which he
attributed largely to reducing the company's inventory by nearly
90,000 vehicles to less than 800,000.
He said GM does not expect a similar reduction in future
quarters, so the cash burn should be smaller for the rest of the
year.
"In that respect, the negative cash flow in the second quarter
is overstated," he said.
So far this year, GM has gone through about $1 billion in cash
per month, including $3.4 billion in the first quarter.
Young said GM had $21 billion in cash and $5 billion available
through credit lines at the end of June for total liquidity of
$26 billion, which he called a strong position. GM already has
announced plans to generate another $15 billion in liquidity in
the next 18 months.
"We're going to get the second quarter behind us and just move
ahead," Young said.
GM's net losses since 2005 total $51.1 billion.
The $15.5 billion loss reported Friday is less than half of GM's
record $39 billion loss in the third quarter of last year. That
loss was due to a charge for accumulated deferred tax credits.
The second-worst loss was $21 billion in the first quarter of
1992.
http://abcnews.go.com/Business/story?id=5503957