GM Reports Preliminary Second Quarter Financial Results, Beats Estimates

[marinerbc]

Originally Posted by GMCSonoma

third straight quarterly profit for the nation's largest automaker.

Yup. Size up the casket.

Well maybe not yet.

[VibenPontiac]

Originally Posted by Perian

IT'S VERY IMPORTANT TO REMEMBER ONE LITTLE DETAIL HERE BEFORE THE "WAY TO GO GM", "WE KNEW YOU COULD DO IT" POSTING FEAST BEGINS...

If you look at the dealer stock levels of SUVs and Pickup Trucks, it is clearly evident that GM has been over producing vehicles during the first six months of this calendar year. Big deal you say? Read the following from Business Week:


And it's worth noting that GM can make profits upwards of $10,000 on each big truck, vs. next to nothing on some of its sedans.

Since GM books a sale as soon as a vehicle leaves the factory, revenue was bound to jump.


Don't be fooled: June sales (and probably July's also) tell us that GM must begin to consider production cuts in their main money making lines of vehicles.

The profit party may be coming to a quick end.

This surprise profit level is sure to be looked at as an anomaly just a few months from now.


Oh, and by the way; the announcement couldn't have come at a worse time - as far as the UAW contracts go.

.

I agree with your implied sentiment that 1 quarter means nothing and with everything you said about profits from trucks/SUVs being under pressure....HOWEVER, the Business Week analyst, like most analysts covering Detroit, forgot to mention the things going well for GM - the actual cars/trucks of the business. GM is not producing crap any more, they should be able to make profits (albeit not $10,000 obviously) on the new cars they have recently introduced and more importantly on those they plan on selling over the next few years. Why? Mainly for all the other things the analyst forgot to mention - he also forgot the labor cost savings GM negotiated for last year, he also forgot the internal cost efficiencies that have been achieved (albeit with the associated loss of blue collar jobs). GM is not negotiating with UAW and did not get the cut backs in 2005 so they could earn $10,000 on an SUV instead of $7,000. They got their cut backs and need more so that cars can be made at a profitable enough level in North America - and with that in mind they are probably well on the way to where they need to be - they will be there assuming GM can get through the negotiations with the UAW with at least a good portion of what they need.

The one thing I have noticed in recent months is that most analysts seem to forget GM have done a remarkable job molding the company into a true global company with cost efficiencies spread out across the globe rather than concentrated in high-cost markets such as Western Europe, North America, and Australia. On the development side GM can now offer a car or truck that, design wise, matches the buyer's needs - American styled, European Styled, or Asian styled - GM has it. The bottom line is that I am convinced most analysts look at GM's health by looking only at the North American market when clearly they need to look at all of its markets.

1 quarter may means NOTHING but its still great news though. I would like to see what cash flow for the quarter was. Profits on the Income Statement don't mean anything unless they make up for any losses in cash flow from investing an/or financing activities or from operating cash flows from the Balance Sheet.

[BigEnos]

Looks like so far their business plan is on track. They've pretty much erased the losses, now it's time to start earning billions in profit. It won't be easy, but I think they can do it. Might want to buy some stock now, it'll probably be over $70 a share in a few years.

[ericmvest]

Hopefully this will silence the business press "geniuses" about the inevitability of bankruptcy.

[Buick61]

Originally Posted by PhishPhood

No Perian is correct in all his qualifications of the announcement. There are two different sets of reporting statistics.

For the SEC and other financial analysts GM is required to report vehicles as 'sold' as soon as they leave the factory...even if they aren't sold to a final retail buyer yet. One difference would be the situation that Chrysler had 4th Qtr last year where it produced vehicles but shipped them to a storage location with no dealer orders on the books yet.

The monthly sales statistics which will be reported tomorrow is a different system. It's generated at the retail level by the various dealers based on first Retail Delivery Reports ( RDR's ). GM's financial situation are not affected at all by these reports.

I didn't disagree with Perian saying that the sales are counted once the vehicle is produced. I disagreed with his statement, "Since GM books a sale as soon as a vehicle leaves the factory, revenue was bound to jump. "

He tied in a revenue jump. With that I took issue. I can understand a dealer order being booked as a sale as it leaves the factory. But I wouldn't think GM actually got any revenue from that "sale" until the dealer actually acquires the vehicle and pays for it out of its floorplanning.

[jkennedy293]

Great news for GM!!

[samkung]

Good to have profit, but that doesnt mean the problem of GM is solved, GM please think more of your beloved fans rather than those shareholder

[coaster.n3rd]

Originally Posted by VibenPontiac

1 quarter may means NOTHING but its still great news though. I would like to see what cash flow for the quarter was. Profits on the Income Statement don't mean anything unless they make up for any losses in cash flow from investing an/or financing activities or from operating cash flows from the Balance Sheet.

Exactly...

[Dynamo]

Originally Posted by Buick61

Let's see.... Bold? check. Italics. Check. Underlining. Check. Pointless trailing dot. Check. A series of short, telegram-like pontifications? Double check. Ah Perian...how ever did I read the news before you were here to properly interpret it for all of us?

Hilarious

[SJZ3]

Originally Posted by Buick61

I didn't disagree with Perian saying that the sales are counted once the vehicle is produced. I disagreed with his statement, "Since GM books a sale as soon as a vehicle leaves the factory, revenue was bound to jump. "

He tied in a revenue jump. With that I took issue. I can understand a dealer order being booked as a sale as it leaves the factory. But I wouldn't think GM actually got any revenue from that "sale" until the dealer actually acquires the vehicle and pays for it out of its floorplanning.

I am not an accounting for GM, but I am an accountant.

In general, "over production" will defer expenses to a later period. But, this happens in all industries (including the one I work for). The trick is being able to match production to sales over the course of a year or so. GM clearly produced more than they sold in Q2. However, I expect the opposite to occur in Q3...they will sell more than they produce (mainly because of the holidays). This will put some pressure on their profits, but considering the size of the profit they made (which was, for the most part, outside of North America and completely irrelevant to the inventory levels of the GMT900) I fully expect them to report a profit in Q3 as well, though possibly smaller.

One thing that was surprising to me was that GM made a profit even after settling on the final amount for Delphi's bankruptcy. They made $891M net profit even after absorbing another big charge for the Delphi settlement.

[GM-10]

Originally Posted by Buick61

In other words, they can't say they had X revenue when no actual money came into the corporation. That seems like fraud to me.

Its legal. Its done by almost all corporations. Its called accrual accounting.

[HoosierRon]

This story made the top of drudgereport.com.

[HEVguy]

Well, despite the debate of the 'state of the General' this bit of good news is still a positive step IMO. In the past couple of years, they've lost money AND had increasing inventory, so this is definitely a better condition!

[Chaz_23]

We all know that GMNA is in trouble and will continue to be in trouble for decades until Americans get over their pathological compulsion to buy Toyoduhs.

The important thing is that GM is doing great elsewhere. But here's my worry, while GM is slightly improving quality in the US, how is the quality of their cars elsewhere? I have yet to hear anything good. If they are producing crappy cars elsewhere or shipping deffective parts to other markets -see article yesterday from quality control guy- then they're setting themselves up for Toyota repeating their US stunt all over the world. GM sells crappy cars like crazy-> Toyota starts selling excellent cars-> people take notice-> people get tired of low quality cars-> people buy Toyoduhs in droves.

What is completely missing in the constant repetition of the mantra of "leveraging global resources" is any mention of quality. While we are led to believe that globalism leads to GM saving a couple of pennies here and there (and leaving a whole lot of Americans without a job) what is it doing for GM's quality? Deffective parts or poorly engineered parts instread of being a localized plant issue now would become a global headache for GM. I can only hope that GM is globalising their concerns about improving quality as well, the last thing they need is the entire globe not willing to buy GM cars because they were burned in the past.

[KUZCO]

almost a billion in profit BUT they want us to give up benefits very interesting, maybe they shouldve lied about their profits