G.M. Drives a Loss
Apr 30 2008
General Motors loses billions, but still impresses Wall Street.
Just how bad are things in the automotive industry? So bad that investors cheer when General Motors racks up $3.3 billion in losses in just three months.
The automaker's first-quarter losses were driven by costs related to a labor strike and charges in its GMAC financing unit. Continued weakness in the North American market also impacted G.M.'s quarter. The slowing economy is especially hurting sales of sport-utility vehicles and pickups.
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The carmaker's shares jumped nearly five percent in premarket trading.
Car sales in Asia, Latin America, and Eastern Europe were strong during the quarter, but not strong enough to offset the sluggish North American market, which was G.M.'s only regional unit to post a loss.
"We continue to leverage our global product portfolio to take advantage of tremendous growth in key emerging markets, while at the same time taking the appropriate actions to deal with the challenging economic conditions in the U.S.," said G.M. chief executive Rick Wagoner in a statement.
G.M. chief finance officer Ray Young told reporters this morning that analysts are underestimating the strength of its overseas operations, according to Bloomberg.
He also said he expects the second quarter to be slightly better for G.M., but he does not expect as much of a recovery as predicted earlier. "The second quarter is probably going to be a tough quarter for the industry,'' he said.
G.M.'s first-quarter results stand in sharp contrast to Ford's unexpected profit for the same period. It was helped by aggressive cost-cutting domestically and strong overseas sales.
