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General Motors: Sales, Marketing, and Financial News

 
Old 10-17-2005, 09:29 AM
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GM posts $1.6 billion third-quarter loss, agrees with UAW **UAW sues GM (page 1)**

GM posts $1.6 billion third-quarter loss - - Reuters / October 17, 2005 - - Source: Automotive News

DETROIT -- General Motors on Monday posted a quarterly loss of $1.6 billion, much worse than Wall Street had expected, and announced a deal with the United Auto Workers union to cut its health-care costs.

GM also said it plans to eliminate at least 25,000 manufacturing jobs.

The world's largest automaker, which lost more than $1.4 billion in the first half of the year amid deepening financial woes, posted a loss of $1.6 billion, or $2.89 a share, for the third quarter. The company had a profit of $315 million in the year-earlier quarter.

GM has seen high gasoline prices slam sales of big SUVs, while increased costs for everything from raw materials to health care have also eroded profits.

Excluding special items -- including a charge of $805 million for asset impairments primarily in North America and Europe and restructuring charges at GM Europe of $56 million -- GM's third-quarter loss totaled $1.92 per share. On that basis, analysts' average forecast was a loss of 81 cents, according to Reuters Estimates.

Quarterly revenue rose more than 5 percent to $47.2 billion.

Months of talks with the UAW over GM's demand for cuts in health care and other benefits -- costs identified by Chief Executive Rick Wagoner as the company's single biggest challenge -- have finally produced positive results.

The tentative agreement is projected to reduce GM's retiree health-care liabilities by about $15 billion and cut its annual employee health-care expense by about $3 billion before taxes. Cash savings are estimated to be about $1 billion a year, GM said.
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Old 10-17-2005, 09:30 AM
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GM, UAW Reach Deal As GM Posts $1.6B Loss - - By Dee-Ann Durbin, AP Auto Writer - - Source: biz.yahoo.com


DETROIT (AP) -- General Motors Corp. on Monday reported it lost $1.6 billion in the third quarter, as its North American division continued to suffer from high health-care costs and falling sales of sport utility vehicles.
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The world's biggest automaker lost $2.89 per share in the July-September period compared with a profit of $315 million, or 56 cents per share, in the third quarter of 2004.

Excluding special items, GM lost $1.1 billion, or $1.92 per share, in the latest quarter. Special items included a charge of $805 million for asset impairments in North America and Europe and restructuring charges of $56 million at GM Europe.

Total revenue was $47 billion for the quarter, up from $44.8 billion in 2004.

GM failed to meet Wall Street's expectations for a loss of 87 cents a share, according to Thomson Financial.

But GM shares rose $3.35, or 12 percent, to $41.33 in morning trading on the New York Stock Exchange as the automaker said it had reached a tentative agreement with the United Auto Workers on a plan to cut its health care costs and that it was considering selling a stake in its finance division.

It was another difficult quarter for GM, which lost nearly $1.4 billion in the first half of the year.

GM's North American division lost $1.6 billion in the third quarter, compared with a loss of $88 million a year ago. The automaker's North American market share was down to 25.6 percent from 28.5 percent a year ago. Through the first nine months of this year, GM's market share was 26.1 percent, down from 27 percent in 2004.

The losses were partly offset by gains at the automaker's finance division, General Motors Acceptance Corp., which earned $675 million, up from $620 million in 2004. GMAC said Hurricane Katrina reduced its third-quarter earnings by approximately $161 million because of credit losses in its auto financing and mortgage businesses.

GM Chairman and CEO Rick Wagoner said the company is considering selling a controlling interest in GMAC with the goal of restoring GMAC's investment-grade rating. GM and GMAC were lowered to "junk" status earlier this year.

GM Europe reported a loss of $150 million in the third quarter, compared with a loss of $236 million a year ago. The automaker's European market share was up slightly to 9.6 percent in the first nine months of the year.

GM Asia Pacific earned $176 million, more than double the $78 million earned in the year-ago quarter. GM attributed its success to gains in China and Thailand. In China, GM's market share rose 2.6 percentage points in the third quarter to 11.7 percent.

GM Latin America, Africa and Mid-East earned $25 million in the third quarter, compared with a net income of $27 million a year ago.
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Old 10-17-2005, 09:30 AM
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Another quarter anothing $1.1 billion...
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Old 10-17-2005, 09:32 AM
  #84  
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Hmm.. what do they mean by quarterly revenue. Im not a wall street whiz.


Though I can say that... those numbers suck. Bad news for GM.
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Old 10-17-2005, 09:35 AM
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So 90% of the loss came from north America operations! Great.

How can a USAmerican company not be able to understand and succeed its own market and someone from Japan and Europe be able to do both better?
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Old 10-17-2005, 09:43 AM
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Originally Posted by agranado
Hmm.. what do they mean by quarterly revenue. Im not a wall street whiz.


Though I can say that... those numbers suck. Bad news for GM.
That's how they performed in the past 3 months. A quarter, is a 3 month period in a fiscal or calendar year (depending on how the company reports its 10Qs). Revenue is pretty much the total money that came in from selling products and services, profit is how much they made after they subtracted expenses from operations and tax.
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Old 10-17-2005, 10:18 AM
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an annual savings of 1billion dollars from their deal with UAW....that is not going to make a difference, is it?
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Old 10-17-2005, 11:13 AM
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Originally Posted by Loseit
an annual savings of 1billion dollars from their deal with UAW....that is not going to make a difference, is it?
Not if they keep losing $6B a year
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Old 10-17-2005, 11:26 AM
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Holy CRAPOLA... That's a lot of money to lose.
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Old 10-17-2005, 12:00 PM
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Originally Posted by 65 Fury Convert
My cousin in Detriot, a UAW member that works for GM, sent out this email below - kinda goes along with this thread. I'd call it a propaganda letter from the union about how the union is working for them. He sent it to everyone and anyone he knows.
Propaganda is right. They'll keep priming the pump, telling their members that it isn't their fault and they shouldn't cut a deal, right up until they shut the doors.
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Old 10-17-2005, 12:14 PM
  #91  
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Originally Posted by gavriil
So 90% of the loss came from north America operations! Great.

How can a USAmerican company not be able to understand and succeed its own market and someone from Japan and Europe be able to do both better?
Good question. It blows my mind why GM and Ford design and sell great cars in Europe and the U.S. gets crap!
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Old 10-17-2005, 12:15 PM
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Related news:

Automotive News / October 17, 2005



General Motors investor Kirk Kerkorian knows a thing or two about buying low and selling high.

He might explain the idea to GM.

GM is losing a bundle selling its 20 percent stake in Subaru parent Fuji Heavy Industries Ltd.

GM originally paid $1.3 billion for 157 million shares of Fuji stock in 1999, or about $8.28 a share.

Since then, the automaker calculated that the holding had appreciated in value to $1.5 billion, or $9.55 a share.

To get out of the deal this month, GM agreed to sell 68 million of its shares to Toyota Motor Corp. for $315 million, or $4.63 a share. Fuji is buying back the remaining 89 million shares, a move that gives GM another $412 million.

GM's total recoup: $727 million, or $773 million less than GM's booked value.

And, after six years of talking about the benefit of partnering with Subaru on product development, shared production and all-wheel-drive technology, GM has little to take away from the deal.
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Old 10-17-2005, 01:06 PM
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I don't blame the UAW too much...but that propaganda letter makes too many assumptions, whether rightful or not, that makes me question it's "validity".

Anyways, I think the UAW, although it does contribute to the hurt, is just a scapegoat for poor designs, engineering, marketing, etc. If the NON-UNION workers who design cars actually designed cars that people like and can effectively compete, these companies wouldn't be hurting and UAW would be a moot point.
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Old 10-17-2005, 01:10 PM
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I can remember when I was a little kid Toyotas and Hondas were perceived as "cheap" cars that wouldn't last long and were cheaply built. They would have rust holes in the bodies on 3 year old vehicle. They were cheaper than the American brands as well. Now it's the opposite. Hondas and Toyotas hold their values better than the American brands. The American brands have to offer deep discounts to sell their cars - not so Honda and Toyota. And it's the American cars that are now perceived as being cheaply made. What a shame...
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Old 10-17-2005, 04:21 PM
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^ so everyone makes money except GM... Interesting.
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Old 10-17-2005, 04:28 PM
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GM's management team needs to be completely replaced. They're doing an absolutely miserable job of managing that company and are going to run it into the ground at this rate.
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Old 10-17-2005, 09:39 PM
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Customers Can't See GM & Ford's Extra Costs

Hidden Costs
Customers Can't See Extra Costs
GM, Ford Must Pay for Missteps
And Wouldn't Care if They Could
October 17, 2005

Most people who buy a new car also choose to spend extra for optional features, such as satellite radios, leather seats, onboard video players or extra airbags. These amenities may add several thousand dollars to the sticker price, but shoppers accept the extra cost to get what they want.

There is no line item on a new car's window sticker for "employee health care" or "recent management mistakes" or "wage difference between the U.S. and Mexico." But those costs exist. It's too bad for Detroit's auto makers that consumers either don't see them or don't assign them much value.

For example, the sticker on a Michigan-made Cadillac CTS sedan might alert buyers that of the roughly $35,000 they might spend to get a nicely equipped car, about $1,500 is going to provide health care to about 1.1 million GM workers and retirees and their dependents, on terms that even Americans with company-provided health care would find enviable.

Another line item might inform the buyer that about $400 of the car's price can be attributed to the difference in straight time assembly labor costs between building the CTS with union labor in Michigan and building it at non-union manufacturing-wage rates. That premium would be more if you put the Michigan workers' pay rates against those of Mexican workers.

How much extra per car do General Motors or Ford Motor spend on management mistakes – failed strategic investments, bad car designs, and flawed marketing strategies? That's hard to know, because it depends on who's defining the term "management mistakes." But GM recently agreed to pay $1.9 billion to get out of a failed alliance with Italian auto maker Fiat. Spread out across GM's annual U.S. sales volume, that's about $500 a car for one year.

Of course, GM and Ford pay even more per vehicle for discounts to prop up sales volumes -- as much as $4,000 to $5,000. You could have a lively debate over how much of that tab is related to built-in incentives to over-produce, poor design, bad calls on fuel economy, atonement for quality sins and other actions that undermine resale value. But at least customers are getting that money back.

The recent decision by the big U.S. auto supplier Delphi to seek Chapter 11 bankruptcy protection -- and the collapse of GM and Ford sales since the companies ended their employee-discount deals earlier this month -- highlight the dilemma that now confronts the Detroit branch of the American auto industry.

Most people, if asked whether they support corporate actions to slash workers' wages by nearly 70% and take away health care and retirement benefits – as Delphi now proposes to do -- probably would respond that no, that's not good for America.

But ask those same people whether they'd pay $1,500 extra for a car that offers less in the way of features or style just so they can support GM's current employee health plan and what answer do you think you'd get? The answer is obvious: GM has lost more market share this year, despite its best efforts. One reason is that GM spots Toyota and Lexus an average of $1,500 a car worth of features or refinement even before consumers start to judge factors such as Toyota's generally superior resale value.

Bob Lutz, the GM vice chairman in charge of world-wide vehicle development, note that passengers aboard a plane judge the airline by such measures as the cleanliness of the cabin, the neatness of the personnel and the quality of the snacks. "We have no idea how good the pilot training is," he says. "All we can judge is the part we see."

The same is true of cars, he says. Consumers judge how well a company designs and manufactures automobiles by what they see. "It's an area where imports were ahead of domestics, and just about everybody was ahead of GM," he says. "That is a gap I think we are closing."

Mr. Lutz's job demands that he dwell in the future, planning cars GM will be selling three or more years from now. He says that as GM rolls out a new global vehicle-design and engineering strategy, it will slash the cost of developing new vehicles. By spinning nine midsize cars – including replacements for the current Chevy Malibu, Pontiac G6, Saab 9-3, and European Opel Vectra – from the same set of basic parts and the same engineering program, Mr. Lutz says GM could save as much as $1 billion over the life of the vehicles, compared with the cars they replace.

"Excellent product is the only thing that will get us out of this," he says.

The auto industry's history suggests he's right. Chrysler, for example, is not now in the same financial straits as GM and Ford largely because during the past four years Chrysler management took harsh medicine, cutting 26,000 jobs. Chrysler also invested in cars and trucks that don't look or drive like clones of the Japanese competition. (GM and Ford only recently appear to have absorbed the lesson that given the choice between a genuine Toyota and an equally bland imitation Toyota, a lot of Americans will just go ahead and buy the real thing. After all, it was probably made in America, too.)

But excellent new cars and trucks won't help if they cost too much, or arrive too late because the manufacturer wasn't able to muster the capital and people to do the job. This is the problem GM and Ford are confronting now. They tend to spend too much on things customers cannot see or feel, and as a result don't spend enough on things customers can.

Consumers cannot see how hard people in U.S. auto plants and engineering labs work. They only see what arrives at dealerships, and how much the vehicle offers per dollar. America's other auto industry – the mostly non-union one owned by Asian and European manufacturers – currently is doing a better job getting the value equation right. The next few months could be crucial in determining whether GM and Ford can follow suit.
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Old 10-18-2005, 05:35 PM
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UAW sues GM for approval of health care deal -- By Dale Jewett - - Source: Automotive News

DETROIT -- The UAW has sued General Motors in order to get court approval for the revised health care coverage plan announced on Monday, Oct. 17.

A lawsuit challenging the changes to the current GM-UAW contract was filed on Tuesday in Detroit by the UAW and two union workers retired from GM, UAW spokesman Paul Krell said.

The union and GM agreed to a settlement on Monday that cuts the amount the automaker will pay for health coverage and increases out-of-pocket expenses for union workers. Details of the plan have not been released.

GM estimates the deal will save it $1 billion a year in cash. The automaker helps provide health care coverage for more than 750,000 employees, retired workers and their families in the United States.

The UAW and GM knew that the lawsuit was necessary to make changes to the contract, Krell said.

GM spokesman Edd Snyder confirmed that GM knew it would be sued on the issue and supported the action.

The lawsuit is needed to gain court approval of changes in health care coverage under the contract for retirees and surviving spouses, Krell said. He said that previous legal decisions have found that the union can bargain for changes for active workers. But changes that affect retirees must be court approved, Krell said.

In order for the court to rule on the changes, a dispute has to exist, Krell added. That explains the need to file a lawsuit, he said.

As part of the lawsuit, which will seek class-action status to cover all GM-UAW retirees and surviving spouses, the union and GM will present the new plan agreed upon on Monday as a settlement offer, Krell said.

The lawsuit will make sure that retirees get information about the revised health care coverage and give them a chance to testify at a fairness hearing, Krell said.

The UAW will begin reviewing the GM deal with leaders of union locals this week, Krell said. The deal will have to be voted upon by workers and clear the court challenge before it takes effect.

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Old 10-18-2005, 05:37 PM
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Unbelievable!
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Old 10-18-2005, 05:40 PM
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GM
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Old 10-18-2005, 06:55 PM
  #101  
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oh god, i guess they are following in Mitsubishi's foot steps...
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Old 10-18-2005, 09:15 PM
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sayonara gm & uaw!
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Old 10-18-2005, 09:24 PM
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Originally Posted by CGTSX2004
GM's management team needs to be completely replaced. They're doing an absolutely miserable job of managing that company and are going to run it into the ground at this rate.
Do you really think this is a managerial problem?

I'm actually amazed that a company that is forced to pay such exorbitant wages, and provide such generous healthcare and retirement benefits can still afford to be in business.
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Old 10-18-2005, 09:55 PM
  #104  
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Originally Posted by SpeedyV6
Do you really think this is a managerial problem?

I'm actually amazed that a company that is forced to pay such exorbitant wages, and provide such generous healthcare and retirement benefits can still afford to be in business.
They would have been fine as long as americans kept on buying huge suv's. They really shot themselves in the foot for not being a step ahead of the market, and I think we all knew suv's were declining in popularity. They invested lots of time and effort into the corvette. That turned out great. If they could make that kind of breakthrough with all their cars, even if it meant reducing the fleet size.
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Old 10-18-2005, 10:23 PM
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Originally Posted by Python2121
They would have been fine as long as americans kept on buying huge suv's. They really shot themselves in the foot for not being a step ahead of the market, and I think we all knew suv's were declining in popularity. They invested lots of time and effort into the corvette. That turned out great. If they could make that kind of breakthrough with all their cars, even if it meant reducing the fleet size.
If my memory serves me right GM barely makes any profit on most of the cars they sell. Even at steeply discounted prices for SUV's & trucks chances are they are still earning more.
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Old 10-18-2005, 11:06 PM
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The government will step in somehow. I just have a feeling.
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Old 10-18-2005, 11:28 PM
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Originally Posted by phile
The government will step in somehow. I just have a feeling.
I think it would be easier for GM to declare bankruptcy and reorganize. That way they won't be encumbered by the burdens of funding outsized retirement, healthcare, and wage benefits with the UAW.

I know that the government bailed out Chrysler about twenty years ago but those days are long gone.
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Old 10-19-2005, 10:20 PM
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GM=

shit can?

or

Government bail?
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Old 10-19-2005, 10:22 PM
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Originally Posted by phile
The government will step in somehow. I just have a feeling.

There is a ton way to go still (downward that is) before the gov't does anything.
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Old 10-19-2005, 10:30 PM
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Originally Posted by gavriil
There is a ton way to go still (downward that is) before the gov't does anything.
At the rate GM's going, it's only a matter of time.
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Old 10-24-2005, 02:46 PM
  #111  
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Originally Posted by cob3683
GM
Why RIP GM, isn't this good news? Isn't this what everyone was asking for, GM reducing healthcare costs?

Help me out here.
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Old 10-24-2005, 03:32 PM
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dang I hate UAW.. bunch of lazy and greedy asses.. they will just drive our jobs oversea to China..
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Old 10-24-2005, 04:03 PM
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haha
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Old 10-25-2005, 10:07 PM
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Originally Posted by Python2121
They would have been fine as long as americans kept on buying huge suv's. They really shot themselves in the foot for not being a step ahead of the market, and I think we all knew suv's were declining in popularity. They invested lots of time and effort into the corvette. That turned out great. If they could make that kind of breakthrough with all their cars, even if it meant reducing the fleet size.
Even at the brink of the oil prices skyrocketing, GM put the next generation RWD sedan platform on hold in order to roll out the GMT 900 truck series first... Sure, it's GM's biggest moneymaker, but don't they realize that the full size truck segment is kind of dead at this point?

Regardless, GM is doing EXCELLENT over in China. They can't keep the Buicks on the dealership lots, so they are making up for the shitstorm here.

By the way, there's no way in hell that GM would go bankcrupt. For starters, I highly doubt that the management would let it become that bad, and even if it did, the government will definitely step in to bail them out. They are not going to sit back and watch a trillion-dollar industry network go down the drain. Countless number of supplier companies and their employees, hundreds of thousands of GM employees... our economy will go into a major depression overnight.


By the way, the Fiat deal? Worst, dumbest fucking idea ever. First they spent billions to acquire it, and now they have to spend billions more to GET RID OF IT. Rick Wagoner should end himself... although I must say he's doing a lot better than Ron Zarrella. That guy single-handedly fucked up GM on a global scale.

I was hoping to get a job at GM after I graduate this December, but hahaha... not anymore, I guess. I wonder if Honda is hiring down in Ohio.
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Old 10-25-2005, 10:14 PM
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Even if they went bankrupt they would probably reorganize and continue to make cars.
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Old 11-09-2005, 09:30 PM
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Exclamation GM to Restate Financial Results!

This is not good.

GM Will Restate
Results for 2001
In Latest Stumble


Auto Maker Says It Booked
'Erroneous' Supplier Credits;
Stock Price Hits 13-Year Low
By JOSEPH B. WHITE and LEE HAWKINS JR.
Staff Reporters of THE WALL STREET JOURNAL
November 10, 2005

DETROIT -- General Motors Corp., whose accounting has been under scrutiny by the Securities and Exchange Commission, said it must restate financial results for 2001 and possibly subsequent years in the latest blow to the beleaguered auto giant and its embattled chairman and chief executive, Rick Wagoner.

Late yesterday, after the close of New York Stock Exchange trading, GM said it overstated income for 2001 by as much as $300 million to $400 million -- equivalent to about 50% of the profit it reported at the time -- by "erroneously" booking credits from suppliers. The company said its accounting for credits from suppliers is "one of the matters" being investigated by the SEC.

GM's admission ended a day in which its shares were battered, falling to their lowest level since November 1992 -- during the company's last financial and management crisis -- in 4 p.m. Big Board trading, closing down $1.23, or nearly 5%, at $24.63. Also yesterday, Fitch Ratings cut its already junk-level rating on GM's debt by another two notches.

GM spokeswoman Toni Simonetti said GM's audit committee had met earlier this week to discuss the accounting issue.

"The issue here was that we basically booked the income in the wrong period. We're going to restate it rather than taking it all in 2001," Ms. Simonetti said. "That income still exists. It's not like that income shouldn't have been booked, it just shouldn't have been booked in all of 2001."

Still, the disclosure that GM materially overstated 2001 income from continuing operations -- and may have to make what it said would likely be "immaterial" adjustments to earnings reported for subsequent years -- will likely add pressure on Mr. Wagoner. He has been battling to turn around losses that have totaled $3 billion for the company so far this year.

Mr. Wagoner, who was CEO in 2001, has spent his five years at the company's helm trying to expand its global footprint while propping up North American sales to generate revenue to cover burgeoning U.S. health-care and pension costs. But this year, intensified competition coupled with rising gas prices, which have dented demand for GM's most profitable models, have undermined Mr. Wagoner's strategy for keeping GM in the black.

The company's falling share price -- GM shares are down 39% this year -- and the downgrading of its debt to junk status by all the major credit-rating agencies symbolize the declining confidence in Mr. Wagoner, who became GM's chief financial officer in 1992 in a boardroom coup that swept out top management.

Until now, GM has largely been untroubled by concerns about accounting improprieties that have tripped up some big U.S. companies in recent years. Neither GM nor Mr. Wagoner nor any GM officer has been accused by the SEC of any wrongdoing.

In April, GM Chief Financial Officer John Devine, responding to questions raised in the media about transactions between GM and its former parts unit Delphi Corp., assured investors in April that GM's accounting for its transactions were "very appropriate" and "pretty simple from our standpoint." Mr. Devine was chief financial officer in 2001; Delphi recently entered Chapter 11 bankruptcy.

GM didn't specify yesterday whether its 2001 restatement plans involved Delphi transactions. GM has recently disclosed that the SEC is investigating issues involving its accounting, including the company's handling of assumptions used to determine certain pension costs.

GM had reported in its 2001 annual report to the SEC that it earned $601 million in net income and income from continuing operations for 2001, down from $4.45 billion in 2000. GM subsequently revised that to reclassify its former Hughes Electronics unit as a discontinued operation. That boosted 2001 income from continuing operations to $1.2 billion.

GM said it expects to complete the review of the situation and "take any appropriate action to correct previously reported financial statements" before it files its annual report for 2005. The company said its board's audit committee concluded on Tuesday that "due to the likelihood of a material restatement of GM's financial statements with respect to 2001, investors should no longer rely on GM's previously filed financial statements for that year," or the accompanying audit reports.

The practice of suppliers making payments to customers, effectively rebating projected cost savings up front, is a touchy one in the auto industry. Delphi, spun off from GM in 1999, has previously acknowledged that it improperly accounted for such payments it received from some of its suppliers.

In a separate accounting matter, GM disclosed yesterday that it has "evaluated the effectiveness of GM's disclosure controls and procedures" related to assessing whether or when certain assets should be reclassified as impaired and written off according to accounting rules. GM said that Mr. Wagoner and Mr. Devine determined that as of Sept. 30, the company's controls were not effective at the "reasonable assurance level" as defined by certain SEC guidelines. GM said the situation "resulted in the failure to timely reduce the carrying value of GM's investment in the common stock of Fuji Heavy Industries to fair value."

GM disclosed previously that it would sell its stake in Fuji, maker of Subaru cars, at a substantial loss. GM said its management has now implemented "additional review procedures" to identify when it should reclassify foreign investments. GM said it is "confident" that it now "has substantially completed the process of fully remediating its related controls and procedures."

The company also said that in July it implemented a new ledger system for the North American and insurance operations of its General Motors Acceptance Corp. auto-financing division, which also sells mortgages and insurance.

Mr. Wagoner has been pushing lately to reverse the company's slide by seeking deeper benefit and cost cuts. In a recent interview, Mr. Wagoner wouldn't say when GM can expect to return to profitability, but he promised more actions to cut costs.

GM already has signaled it will announce more plant shutdowns soon. The company last month reached agreement with the United Auto Workers to cut health-care cash outlays by as much as $1 billion a year, although GM has agreed to put the cash it saves in 2005 and 2006 into a trust that will help offset higher costs for GM retirees.

Mr. Wagoner has been battling to stop GM's two decades of decline ever since he took over as CEO in 2000. Within six months, amid a sluggish economy and sliding sales, he announced a wide-ranging cost cutting plan that included the shutdown of GM's 103-year-old Oldsmobile division, 15,000 job cuts and factory shutdowns in Europe.

But Mr. Wagoner took a bold gamble after the terrorist attacks of Sept. 11, 2001, declaring that GM would offer 0% interest loans for five years on virtually all its models. Under the patriotic banner, "Keep America Rolling," GM's call to shoppers helped jump-start the U.S. economy and avert a potentially deeper downturn than ultimately occurred.

But while the campaign boosted GM's sales and its public image, it came at a substantial price. The big discounts ate in to GM's profit margins and helped to sharply depress its 2001 profits. Mr. Wagoner rebuffed critics by saying that while aggressive discounting, symbolized by the 0% interest deals, was costly, allowing sales and market share to decline would be costlier still, given GM's huge and largely fixed burden for U.S. hourly workers and retirees. Under GM's labor agreement with the UAW, GM factory workers get paid up to 95% of their base salary even when laid off.

In one widely quoted speech, Mr. Wagoner told his rivals to "quit whining" about the rising costs of discounts, known in the auto industry as "incentives." More recently, in September, Mr. Wagoner said during a discussion with reporters at the Frankfurt Motor Show, that it's "simplistic" to think that GM, with its legacy cost burden, can recover profitability simply by cutting capacity or cutting brands. "Our retiree base isn't shrinking," he said.

GM's health-care costs, currently estimated at $5.6 billion a year, aren't shrinking either. Yesterday, in a filing with the SEC, GM provided more detail about its annual and future health-care obligations. The company already has withdrawn about $2 billion this year from a fund earmarked for paying employee health benefits to cover ongoing health-care costs, and said it is "evaluating the need for additional withdrawals as the cost of health care continues to adversely affect GM's liquidity."

http://online.wsj.com/article/SB1131...?mod=djemalert
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Old 11-09-2005, 10:30 PM
  #117  
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Oh man. That's terrible. This company has no good news to report at this point.
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Old 11-09-2005, 10:47 PM
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Oh CRAP....

ENRON Pt II
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Old 11-09-2005, 10:54 PM
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Christ. It keeps getting worse. This is really sad.
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Old 11-10-2005, 03:01 PM
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Does it make sense to change CEO's? It's worked wonders for Chrysler. Their former CEO was in on the 300/Magnum and got moved to fix Mercedes who is struggling now.
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