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Third largest decline in automaker's history blamed on sales, leases
By Greg Bensinger
and Jeff Green
Bloomberg News
Published on Saturday, Aug 02, 2008
General Motors Corp. reported Friday a quarterly loss of $15.5 billion, the third biggest in its 100-year history, because of plunging U.S. sales and the declining value of truck leases.
The deficit of $27.33 a share compares with a profit of $891 million, or $1.56, a year earlier. Excluding costs GM considers one-time, the per-share loss was four times bigger than analysts projected. Labor strikes contributed to a $9.9 billion drop in North American revenue, and sales worldwide tumbled 18 percent to $38.2 billion.
Chief Executive Officer Rick Wagoner has cut manufacturing costs by $9 billion and plans to boost liquidity by as much as $17 billion to remain solvent. The world's largest automaker has posted $69.8 billion in losses since 2004 and said Friday it must have $11 billion to $14 billion each month to pay its bills.
''They really need those external fundraising measures to get through to 2010,'' said Brian Johnson, a Chicago-based Lehman Brothers analyst. ''We cannot count on an economic rebound.''
GM has $21 billion in cash and marketable securities and another $5 billion from available bank loans. Its fourth consecutive quarterly loss comes as U.S. auto sales fall to 15-year lows.
''There is a tendency to throw up your hands and say this can't be fixed,'' said Wagoner, in his ninth year as CEO. ''We do have adequate liquidity through 2009 even with continuing difficult market conditions.''
General Motors Corp. reported Friday a quarterly loss of $15.5 billion, the third biggest in its 100-year history, because of plunging U.S. sales and the declining value of truck leases.
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