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GM posts $3.25 billion loss in Q1, stock rises

From Automotive News:

GM posts $3.25 billion loss in Q1, stock rises
GMAC, Delphi and American Axle are costly problems

Jamie LaReau
and Philip Nussel
Automotive News
April 30, 2008 - 7:22 am ET
UPDATED: 4/30/08 1:52 p.m. EDT

DETROIT -- General Motors today lowered its estimate for U.S. total industry vehicle sales for 2008 after it reported a net loss of $3.25 billion during the first quarter. The automaker posted a net loss of $42 million during the 2007 first quarter.

Slow U.S. vehicle sales, high fuel prices and a continued housing slump prompted GM to lower its projected U.S. industry sales from just more than 16 million units to the mid-to-high 15-million-unit range, CFO Ray Young said during a conference call with the media and analysts.

Most of GM's reported loss came from one-time charges for its troubled GMAC Financial Services investment and the bankruptcy restructuring at supplier Delphi Corp.

Not including one-time items, GM lost $350 million, compared with a loss of $10 million a year earlier.

Wall Street expected to worse. GM stock soared 13.7 percent to $24.11 a share as of 1:28 p.m. EDT.

GM also said it lost about $800 million in the quarter because of costs stemming from the UAW's strike at supplier American Axle & Manufacturing Holdings Inc.

GM posted total revenue of $42.7 billion, down from revenue of $43.4 billion during the same quarter last year.

North America
GM said during the quarter it took a $1.45 billion impairment charge for its 49 percent stake in troubled financier GMAC Financial Services. The automaker also took a $731 million noncash charge for estimated costs of supporting Delphi's restructuring.

GM's market share in North America dropped from 22.5 percent in the year-ago period to 21.7 percent. U.S. market share dropped from 22.8 percent to 22.1 percent.

For its North American vehicle operations, GM reported an adjusted loss before taxes of $611 million on revenue of $24.5 billion, compared with an adjusted loss of $269 million on revenue of $28.1 billion during the same quarter last year.

GM's revenue per unit in North America rose $503 to $21,575 in the first quarter, compared with a year earlier.

"We see good cost performance in North America," said COO Fritz Henderson during the call. "Losing $600 million in North America is not an acceptable result at all, but to have achieved it in that kind of (market) disruption shows there are some positive things we can build on."

Henderson listed strong launch products such as the Chevrolet Malibu, Cadillac CTS and Chevrolet Traverse crossover due out later this year as factors that GM could build on to boost overall sales.

Another positive factor was the sharp decline in GM's inventories, which dropped by about 100,000 units because of the American Axle strike. Most of that drop was in full-sized SUVs and trucks. GM will end April with about 840,000 units in inventory, Henderson said.

"Full-sized truck inventory is still higher than we'd like," Henderson said. "We are looking at opportunities to grow production for the cars and vehicles that are the hottest sellers."

GM won't get involved in supplier strike
When asked if GM would help to resolve the American Axle strike, Henderson said GM does not intend to get involved.

"The Axle strike affected the first quarter," Henderson said. "Will it have an effect over the course of a year. Who knows? We're not going to run out and aggressively try to rebuild inventory."

Overseas, GM said it continued to make money. It posted a combined $1 billion gain before taxes from operations in Asia, Europe and other regions.
Said Henderson: "When we look at emerging markets, the strategy is to take our foot, firmly fit it on the accelerator and jam it to the floor."
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