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View Full Version : GM Posts Largest-Ever $38.7B Annual Loss, Offers Buyouts to 74,000 Workers



Altezza
02-12-2008, 11:56 AM
http://www.foxnews.com/story/0,2933,330393,00.html



DETROIT — General Motors Corp. reported the largest annual loss for an automotive company Tuesday and said it is making a new round of buyback offers to U.S. hourly workers as it struggles to turn around its North American business amid a weak economy.

GM said it lost $38.7 billion in 2007. The loss largely was due to a third-quarter charge related to unused tax credits.

The Detroit-based automaker also on Tuesday said it was offering a new round of buyouts to all 74,000 of its U.S. hourly workers who are represented by the United Auto Workers.

The 2007 loss topped GM's previous record in 1992, when the company lost $23.4 billion because of a change in health care accounting, according to Standard & Poor's Compustat.

Excluding the tax charge and other special items, GM lost $23 million, or 4 cents per share, for the year, compared with a net income of $2.2 billion in 2006, beating Wall Street's expectations. Analysts polled by Thomson Financial expected GM to post a full-year loss of 95 cents per share.

GM posted a loss of $722 million, or $1.28 per share, in the fourth quarter, compared with a net income of $950 million in the year-ago quarter. Fourth-quarter charges included $622 million to Delphi Corp., GM's former parts division, for its restructuring efforts.

GM reported $181 billion in revenues for the year, down from $206 billion in 2006. Its automotive business saw record automotive revenues of $178 billion in 2007, up $7 billion from a year ago thanks to growth in emerging markets and favorable exchange rates.

GM was profitable in every region outside North America. GM's Latin America, Middle East and Africa division reported a record $1.3 billion in earnings, up 140 percent from 2006. GM's Asia Pacific division earned $744 million, up from $403 million in 2006, while GM Europe reported a profit of $55 million, down from a profit of $357 million in 2006.

But GM's North American division continued to struggle, posting a $1.5 billion loss for the year, nearly identical to its $1.6 billion loss in 2006. GM's North American division also reported a loss of $1.1 billion in the fourth quarter, compared with a loss of $129 million in the year-ago quarter.

GM Chairman and Chief Executive Rick Wagoner said the weak U.S. economy and high commodity prices hurt turnaround efforts in North America. He said GM's decision to reduce low-profit sales to daily rental companies by 110,000 in 2007 also affected U.S. sales.

GM's results also were dragged down by its 49 percent stake in GMAC Financial Services, which lost $2.3 billion in 2007. GM reported a $1.1 billion loss attributed to GMAC.

Wagoner said the company made significant progress in 2007, reducing structural costs in North America, negotiating a historic labor agreement and growing aggressively in Latin America and Asia.

"We're pleased with the positive improvement trend in our automotive results, especially given the challenging conditions in important markets like the U.S. and Germany, but we have more work to do to achieve acceptable profitability and positive cash flow," Wagoner said in a statement.

GM barely retained its title as the world's largest automaker in 2007, selling just 3,000 more vehicles than Toyota Motor Corp. GM sold a total of 9,369,524 vehicles worldwide, up 3 percent from the year before.

rage2
02-12-2008, 12:00 PM
Its automotive business saw record automotive revenues of $178 billion in 2007, up $7 billion from a year ago thanks to growth in emerging markets and favorable exchange rates.
We're being gouged on prices! :D

sputnik
02-12-2008, 12:08 PM
Not that major of a loss once you factor out the unused tax credits that they are using a write offs.

GM really only lost $23 MILLION with those things factored out.

Xtrema
02-12-2008, 12:16 PM
I think they are regretting not selling GMAC years ago.

Wonder that unused tax credit is just a tactic used to lay off 75K.

bspot
02-12-2008, 12:22 PM
Originally posted by Xtrema
I think they are regretting not selling GMAC years ago.

Wonder that unused tax credit is just a tactic used to lay off 75K.

It's not really a layoff though, because it isn't forced (yet). If no one takes the offer of the buyout, then who knows.

Last I heard GM was 1% of the US GDP, which is huge. As they tank, so does the US economy.

heavyD
02-12-2008, 12:34 PM
74,000 buyouts.:eek: I wonder what the financial hit would be if all 74,000 took the buyout at once? I got over $30K in a package last year for only 6 years work and I'm sure that some longtime GM employees would warrant some pretty large packages.

dimi
02-12-2008, 12:57 PM
ZR1 to the rescue! :thumbsup:

01RedDX
02-12-2008, 01:19 PM
.

Canmorite
02-13-2008, 12:04 AM
Originally posted by dimi
ZR1 to the rescue! :thumbsup:

They would need to sell a huge number of units, which they won't. ZR1 is just not comparable to the Cobalt or their truck division in terms of amount of units/margin per vehicle.

dino_martini
02-13-2008, 12:18 AM
I have faith in GM. We will see what will happen though.

Supa Dexta
02-13-2008, 04:46 AM
Unreal.. Now where does that loss come from? Am I naive in thinking it works just as any bank account, they keep putting more and more in and taking even more out. And at what point are they not taking out something that wasn't in there, every year? Thats a hell of an over draft..

I thought fords 12b loss last yr was nuts!

DUBBED
02-13-2008, 06:25 AM
Originally posted by sputnik
Not that major of a loss once you factor out the unused tax credits that they are using a write offs.

GM really only lost $23 MILLION with those things factored out.



Originally posted by Supa Dexta
Unreal.. Now where does that loss come from? Am I naive in thinking it works just as any bank account, they keep putting more and more in and taking even more out. And at what point are they not taking out something that wasn't in there, every year? Thats a hell of an over draft..

I thought fords 12b loss last yr was nuts!

When a company reports a 'Taxable loss' in a year they have the ability to report a Tax Asset on their balance sheet. As they generate income in the future they are able to apply those amounts and reduce the amount of taxable income and tax paid. Since GM is posting persistant losses they have been unable to apply those deductions which have now expired, and the only way to remove them from the balance sheet is to report them as a loss on the income statement.

It does represent a big loss because if the company does generate taxable income in the future they will now have to pay tax on the entire amount, instead of everything beyond that taxable amounts. Judging by the amount of credits they lost, they could have raised 100 billion in income and not paid a dime in tax, depending on the tax rate.

Edit: Just read GM's release, I guess it was an adjustment to their Future Tax Valuation account, which means that it is more likely than not that they will not be able to use those credits in the future, and had to re-value their assets. However, if they do generate enough income in the future they might be able to restore some of the amount.

treg50
02-13-2008, 08:57 AM
74 000 sounds good. Hopefully GM can shake off a LOT of that parasitic union deadweight.

The unionized working are sinking the very ship they work for. GM can't afford to be as good to their employees as use to nor can they afford to keep as many as they used to (as stated).

I hope GM gets this done, they have some promising cars coming out.

blownz
02-13-2008, 09:24 AM
I'm not a big fan of GM at all but I really hope they turn things around soon. Most of their latest vehicles have been pretty good and they seem to be catching up to the imports rather quickly. Now they just have to work on changing all the stubborn peoples perception of their vehicles.

I really hope we see a day where all three American automakers are posting profits again. All three posting big profits will be beneficial to almost everyone in NA.

DonJuan
02-13-2008, 10:40 AM
Originally posted by dimi
ZR1 to the rescue! :thumbsup:

Now featuring a 10 million dollar price tag!

LOL!

Losses like this is what kills projects like the ZR1

dimi
02-15-2008, 12:14 AM
Originally posted by Canmorite


They would need to sell a huge number of units, which they won't. ZR1 is just not comparable to the Cobalt or their truck division in terms of amount of units/margin per vehicle.

Theoretically I figured 600+ hp could be enough to pull GM out of the shit that they are in. Guess not :( On a serious note I think the new Malibu has a lot going for it and GM should find many customers there.

Graham_A_M
02-15-2008, 08:42 PM
Originally posted by DonJuan


Now featuring a 10 million dollar price tag!

LOL!

Losses like this is what kills projects like the ZR1

LMAO...:werd:

nice corporate flagships like the ZR1 are the first to go, in place with money making vehicles. That is what made Dodge stay afloat in the 80's with their now laughed at K-cars.

I have a lot of faith in GM. I beleive now their starting to make decent cars. With the absolute horse-shit they made in the 90's, this was in-evitable. Asides from a Corvette or Trans-am, (and besides their indestructable trucks I mean) there are no 1990's GM vehicles I'd ever own. Cavaliers, Monte Carlo's, Luminas.....

Jesus... what were they thinking was going to happen? talk about the having your head in the wrong place :nut:

So now GM is fighting extremely hard to re-shape peoples opinions of the brand, and its costing an insane amount of money. I hope they forever remember this lesson.

strong
02-15-2008, 08:58 PM
Just to note it wasnt just the K car for Dodge it was the Caravan that saved their ass and I can say that the Camaro aint nice enough to save GMAC on this one

Graham_A_M
02-15-2008, 09:01 PM
^ Your right I forgot about the Caravan. I dont think their stupid enough to think the Camaro will do anything other then please those interested. I dont expect this to be a cash-cow at all for them. I'll make money for sure.... but I can't see this even making a difference in their stock prices. :dunno: