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GM Staggers Under Losses
The end of America's love affair with SUVs hit General Motors hard. Even aside from huge one-time costs, the company lost over $6 billion
by David Welch

General Motors (GM) lost a staggering $15.5 billion in the second quarter as the company struggled to come to grips with a weak economy and a head-spinning change in consumer tastes.

GM said on Aug. 1 that $9.1 billion of the losses came from one-time charges and writedowns. But the one-timers stemmed from restructuring moves taken because GM's business is out of step with the car market. Take those away, and GM still lost $6.3 billion.

The freefall in sales of SUVs and pickup trucks continues to hammer GM's revenue and profits. In North America, revenue fell $10 billion in the quarter, to $19.8 billion. Discounting one-time restructuring charges, GM lost $4.4 billion in its home market.

Even GM's overseas operations, while mostly profitable, didn't have such great news. GM's rebounding European business made just $20 million, a far cry from the $315 million the unit made in the second quarter last year. The automaker's Asia-Pacific business lost $163 million, though much of that was due to a one-time accounting charge. Latin America was GM's one bright spot: Profits grew 50%, to $445 million.

Losses Nearly Everywhere
Since GM has long relied heavily on pickup trucks and SUVs for its profits, the consumer shift to smaller, thriftier vehicles has thrown the company into its second financial crisis in three years. And whereas investors and analysts usually discount one-time charges, in this case they are too big to ignore. Of the $9.1 billion GM calls one-timers, $3.3 billion came from buying out hourly workers to cut payroll. Cutting production and closing plants ate up $1.1 billion. Then there's GM's former parts unit, the bankrupt Delphi. GM had to set aside $2.8 billion to help bail out the parts maker.

Even GM's lending operations have turned up snake eyes. GMAC, which is now 51% owned by Cerberus Capital Management, lost $2.5 billion in the quarter. GM's share of that loss comes to $1.2 billion.

To make matter worse, GM had to write down about $2 billion in automotive leases. Many carmakers are taking hits in their leasing portfolios, mostly because of a drop in value of SUV prices. Over the past decade, carmakers leased millions of SUVs. Now the gas guzzlers are coming back with resale values lower than executives anticipated when they leased the car. So the companies are selling them at a loss.

Focus on Conserving Cash
Add it all up, and GM continues to burn through a lot of cash. The company said it spent $3.9 billion in cash in the quarter, leaving it with a reserve of $21 billion. That may seem like a lot of money, but analysts say GM needs at least $10 billion on hand to keep parts coming in and plants rolling. Since the end of last October, GM has eaten up $10 billion. That's why the company announced moves last month to save $10 billion in cash through various cost-cutting moves, and to raise $5 billion. GM Chief Financial Officer Ray Young said the company's primary focus is on conserving cash. GM Vice-Chairman and Chief Operating Officer Frederick "Fritz" Henderson said GM knew how bad its second quarter results would be when the company drafted that plan. So he believes GM's cash should last through the current downturn.

J.P. Morgan analyst Himanshu Patel said in a research note that GM's overseas operations were weaker than expected. If its international businesses are weakening, the company will have a very tough time getting back in the black.

More here: http://www.businessweek.com/lifestyle/content/aug2008/bw2008081_979719.htm?campaign_id=yhoo
 

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GM Staggers Under Losses
The end of America's love affair with SUVs hit General Motors hard. Even aside from huge one-time costs, the company lost over $6 billion
by David Welch

General Motors (GM) lost a staggering $15.5 billion in the second quarter as the company struggled to come to grips with a weak economy and a head-spinning change in consumer tastes.

GM said on Aug. 1 that $9.1 billion of the losses came from one-time charges and writedowns. But the one-timers stemmed from restructuring moves taken because GM's business is out of step with the car market. Take those away, and GM still lost $6.3 billion.

The freefall in sales of SUVs and pickup trucks continues to hammer GM's revenue and profits. In North America, revenue fell $10 billion in the quarter, to $19.8 billion. Discounting one-time restructuring charges, GM lost $4.4 billion in its home market.

Even GM's overseas operations, while mostly profitable, didn't have such great news. GM's rebounding European business made just $20 million, a far cry from the $315 million the unit made in the second quarter last year. The automaker's Asia-Pacific business lost $163 million, though much of that was due to a one-time accounting charge. Latin America was GM's one bright spot: Profits grew 50%, to $445 million.

Losses Nearly Everywhere
Since GM has long relied heavily on pickup trucks and SUVs for its profits, the consumer shift to smaller, thriftier vehicles has thrown the company into its second financial crisis in three years. And whereas investors and analysts usually discount one-time charges, in this case they are too big to ignore. Of the $9.1 billion GM calls one-timers, $3.3 billion came from buying out hourly workers to cut payroll. Cutting production and closing plants ate up $1.1 billion. Then there's GM's former parts unit, the bankrupt Delphi. GM had to set aside $2.8 billion to help bail out the parts maker.

Even GM's lending operations have turned up snake eyes. GMAC, which is now 51% owned by Cerberus Capital Management, lost $2.5 billion in the quarter. GM's share of that loss comes to $1.2 billion.

To make matter worse, GM had to write down about $2 billion in automotive leases. Many carmakers are taking hits in their leasing portfolios, mostly because of a drop in value of SUV prices. Over the past decade, carmakers leased millions of SUVs. Now the gas guzzlers are coming back with resale values lower than executives anticipated when they leased the car. So the companies are selling them at a loss.

Focus on Conserving Cash
Add it all up, and GM continues to burn through a lot of cash. The company said it spent $3.9 billion in cash in the quarter, leaving it with a reserve of $21 billion. That may seem like a lot of money, but analysts say GM needs at least $10 billion on hand to keep parts coming in and plants rolling. Since the end of last October, GM has eaten up $10 billion. That's why the company announced moves last month to save $10 billion in cash through various cost-cutting moves, and to raise $5 billion. GM Chief Financial Officer Ray Young said the company's primary focus is on conserving cash. GM Vice-Chairman and Chief Operating Officer Frederick "Fritz" Henderson said GM knew how bad its second quarter results would be when the company drafted that plan. So he believes GM's cash should last through the current downturn.

J.P. Morgan analyst Himanshu Patel said in a research note that GM's overseas operations were weaker than expected. If its international businesses are weakening, the company will have a very tough time getting back in the black.

More here: http://www.businessweek.com/lifestyle/content/aug2008/bw2008081_979719.htm?campaign_id=yhoo
conserving cash? hard to believe when they are buying ouy Hummer dealers, throwing millions at BP &G points to consolidate, and planning another round of employee buyouts. add in the announced intention to pay Canadian workers even while their plant is closed. on top of these fiscal draining moves, witness the continued wasting of tens of millions on ineffective marketing and you can't imagine the Red Ink stopping anytime soon.
 

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conserving cash? hard to believe when they are buying ouy Hummer dealers, throwing millions at BP &G points to consolidate, and planning another round of employee buyouts. add in the announced intention to pay Canadian workers even while their plant is closed. on top of these fiscal draining moves, witness the continued wasting of tens of millions on ineffective marketing and you can't imagine the Red Ink stopping anytime soon.
Lets not forgot the 15-20% of white collars.
 

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Lets not forgot the 15-20% of white collars.
as bad as things have been recently, I'm afarid to say it's going to get a whole lot worse, particularly for Michiganders.
 

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I'd say, prepare for MAJOR lay-off's (blue and white collar) and plant closures/moth balling. Do they have small cars coming? Whats their future plans here?? Sorry for the ignorance, Ive been following Chrysler and spending all my energy over there LOL.
 

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as bad as things have been recently, I'm afarid to say it's going to get a whole lot worse, particularly for Michiganders.
Would it surprise you the amount of money Michigan senators are willing to give to reverse that action?
 

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Lets not forgot the 15-20% of white collars.
Yeah, but don't think that the 15-20% of white collars will get buyouts. They'll be lucky to get severance. Remember, they aren't represented by the UAW and don't have the golden parachute that the assembly workers generally have.
 

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Would it surprise you the amount of money Michigan senators are willing to give to reverse that action?
Where are they going to get the money? I can guarantee you that Congress won't approve any kind of a bailout until after a new President has been elected. The state of Michigan itself can't afford to bailout GM, Ford, or Chrysler either individually or collectively. One or two are going to have to die, or Americans are going to have to start buying American again. Which do you think is more likely?
 

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Yeah, but don't think that the 15-20% of white collars will get buyouts. They'll be lucky to get severance. Remember, they aren't represented by the UAW and don't have the golden parachute that the assembly workers generally have.
They will be getting in most cases an early retirement package. May not be billions of dollars, but it will be enough to show up on the map.
 

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Where are they going to get the money? The state of Michigan itself can't afford to bailout GM, Ford, or Chrysler either individually or collectively.
No way in hell Michigan can bail out them, they are borrowing money to keep the doors open already. Michigan is still deep in the soup.
 

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Think it's time for the government to step in?? Bush, can you do one good thing in your 8 years in office?!?!
 

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Where are they going to get the money? I can guarantee you that Congress won't approve any kind of a bailout until after a new President has been elected. The state of Michigan itself can't afford to bailout GM, Ford, or Chrysler either individually or collectively. One or two are going to have to die, or Americans are going to have to start buying American again. Which do you think is more likely?
The senators are likely to give GM several billions per year for 5 years as well as Ford and Chrysler in order to help fund some R&D costs towards more fuel efficient technologies. No where do I see anything that says bailout. None of the 3 need to be bailed out of anything.
Think it's time for the government to step in?? Bush, can you do one good thing in your 8 years in office?!?!
Bush said he refuses to do anything. Obama and McCain said they will place a special funding.
 

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:bounce: "Let's write another story about how bad it is at GM..."

"Dirty Laundry" by Don Henley
plays in the background


"I make my living off the Evening News
Just give me something-something I can use
People love it when you lose,
They love dirty laundry

Well, I coulda been an actor, but I wound up here
I just have to look good, I don't have to be clear
Come and whisper in my ear
Give us dirty laundry

Kick 'em when they're up
Kick 'em when they're down
Kick 'em when they're up
Kick 'em when they're down
Kick 'em when they're up
Kick 'em when they're down
Kick 'em when they're up
Kick 'em all around

We got the bubble-headed-bleach-blonde who
comes on at five
She can tell you 'bout the plane crash with a gleam
in her eye
It's interesting when people die-
Give us dirty laundry

Can we film the operation?
Is the head dead yet?
You know, the boys in the newsroom got a
running bet
Get the widow on the set!
We need dirty laundry

You don't really need to find out what's going on
You don't really want to know just how far it's gone
Just leave well enough alone
Eat your dirty laundry

Kick 'em when they're up
Kick 'em when they're down
Kick 'em when they're up
Kick 'em when they're down

Kick 'em when they're up
Kick 'em when they're down
Kick 'em when they're stiff
Kick 'em all around

Dirty little secrets
Dirty little lies
We got our dirty little fingers in everybody's pie
We love to cut you down to size
We love dirty laundry

We can do "The Innuendo"
We can dance and sing
When it's said and done we haven't told you a thing
We all know that Crap is King
Give us dirty laundry!

(the above song lyrics are the property of the artist and were copied from the following website, http://www.sing365.com/music/lyric.nsf/SongUnid/FA45294BB52EC2E6482568E000122C73)
 

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"Bush is finally doing something right by not favoring corporate loans and corporate welfare." As opposed tothe nation where your Infin. came from. they have only be doing it for lo these 55 years!!!!!
 

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Anyone here who has a car other than GM needs the SERIOUSLY STFU about Bush.
Its an issue between GM and our retarded citizens of the USA.
 

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Didn't they pay almost a billion for that stupid office building they are in?



Move to the suburbs....they'll save money in the long run (and probably the short term too).
 
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