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.
This article was posted: Friday, August 1, 2008 at 11:16 am