Is The Worst Yet To Come For GM?
Posted By:Phil LeBeau
As I wrapped up my vacation and heard that General Motors planned to report second quarter earnings on Friday, I started wondering, "Just how big will the loss be for the quarter?"
Surely, it won't come close to GM's quarterly loss in the third quarter last year totaling more than $38 Billion. But keep in mind, that number was almost entirely due to a non-cash accounting-related charge.
Friday, Wall Street analysts are expecting GM to lose $1.489 billion. If they are right, the loss will be just short of the $1.631 billion GM lost (excluding charges) in that woeful third quarter of 2007. But much has changed since then. And it's the reason many investors are worried about what GM will report Friday. Sales have plummeted, residuals on leases are in the tank, and the American Axle strike in April and May hit the company hard.
I fully expect GM to follow Ford's lead and announce billions in charges as the company continues to rapidly downsize and adjust its operations to a weakening auto market. So the headline number may be a whopper. Nowhere close to the $38.6 billion loss in the third quarter of last year, but big enough to get A LOT of attention. And believe me it will.
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