Greg Bensinger and Jeff Green
Friday, Aug 1, 2008
General Motors Corp. reported a second-quarter 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 shares fell as much as 11 percent.
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 4 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.
The results step up pressure on Chief Executive Officer Rick Wagoner, 55, to show he can revive the largest U.S. automaker. Wagoner, in his ninth year as CEO, has posted $69.8 billion in losses since 2004 and is trying to raise as much as $17 billion in cash while speeding the development of fuel-saving cars to replace the sport-utility vehicles being shunned by U.S. buyers.
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“They really need those external fund-raising measures to get through to 2010,” said Brian Johnson, a Chicago-based Lehman Brothers analyst, in a Bloomberg Television interview. “We cannot count on an economic rebound.”
GM’s fourth straight quarterly loss comes as a weakened U.S. economy and soaring gasoline prices drag U.S. auto sales to 15- year lows. Demand for GM products dropped 16 percent through June, and analysts expect the automaker to report a decline in that range when July sales are released today.
“The second quarter has been one of the fastest-changing quarters I’ve ever seen” in terms of consumers switching from pickup trucks and SUVs to cars and small SUVs, Chief Financial Officer Ray Young told reporters in Detroit today.