GM posts $15.5B 2Q loss, 3rd-worst in its history
DETROIT (AP) General Motors Corp. 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 per share was in stark contrast to the year-ago period when GM recorded a net profit of $891 million, or $1.56 per 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 Corp., 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 percent 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 pickup trucks 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 Inc., 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 per share. Twelve analysts surveyed by Thomson Financial predicted a $2.62 per share loss on revenue of $44.57 billion.
GM shares fell 43 cents, or 3.9 percent, to $10.64 in midday trading after falling nearly 11 percent 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.
Aug 2, 2008 at 8:49 p.m.
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janesville hero is a person with obvious problems, help is out there hero, really, how long can you live with such hate in your soul. My guess would be one of your parents, I'm leaning toward your father, did he belittle you when you were a child? beat you? mental abuse? or was it your mother, never giving enough love and attention? you really can get passed it, with help, I for one am rooting for you. best of luck.
Aug 2, 2008 at 2:05 p.m.
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If you are going to let a few trolls like JanesvilleZero get you down, on a blog no less, then you weren't very happy here anyway. The rest of us with a little thicker skin will survive. Good luck with your move.
Aug 2, 2008 at 8:44 a.m.
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I can't take it anymore. Ever since GM announced they are ceasing production in Janesville I have been sitting here reading all the jabs towards the GM and UAW workers and quite frankly Im SICK OF IT. The people like janesvilleHero are alot of the reason why my wife, son and I are so excited to be moving out of this town that people dont like us anyway. Maybe after all the people my age that are losing thier jobs leave and stop giving to the community (echo, coat drives, mda tub run,united way, and many more charities) then this town full of ignorant people will understand what our too high of wages did for every one. That's not even to mention all the money we spent at area businesses that pay other peoples wages. After its all said and done if GM does bring in something else maybe all of you people that think the work is too easy for the pay we get can go get a job there and make $14.00 an hour like you think we should make, and tear your bodies up for less money. So in closing my family would like to say good-bye to this jealous and snobbish town.
Aug 2, 2008 at 1:15 a.m.
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I think in the coming years you will see a different General Motors. It will take a few more years, but I think GM is making the right moves to position itself well for the future. With additional hybrids and a multitude of cars that get more than 30mpg GM will eventually see the light of day. Moreover, with the new Volt, GM can position itself as a leader in the next wave of alternative vehicles. In addition, GM has made great strides in increasing quality, efficiency, and reducing legacy cost. The only GM hasn’t done well is market itself. This is something Toyota has mastered.
Aug 1, 2008 at 8:25 p.m.
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Judging by your name JanesvilleHero, your ego is self-inflating...jmo
Aug 1, 2008 at 7:17 p.m.
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Jnsvl"Hero"....why don't you just get out of town. You never have anything good to say about Janesville anyway and people get tired of your doom and gloom. If you can't say anything good, then shut-up.
Aug 1, 2008 at 3:51 p.m.
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Give Wagoner another bonus for doing such a fine job.
Aug 1, 2008 at 1:23 p.m.
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I'd always hoped GM would smarten up. They once had 50% of the US car market, but that was a long time ago, and they should have trimmed marques and production years ago. They are still at or near the top, globally, in man-hours per vehicle produced, despite continual improvement. That just wasn't a sustainable business model.
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Everyone is considering the question of whether GM will remain in Janesville, but it is starting to have overtones of whether GM will remain, period.
Aug 1, 2008 at 1:07 p.m.
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Glad I sold off my shares long ago! Now I'm doing just great while financial fools and "quality" GM employees continued to hold faith in a dying dinosaur. I'd feel more pity if it wasn't so clearly moving towards this point for years. You get what you deserve, is all I have to say.
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