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More good news!

Discussion in 'Financial Cents' started by Clyde, May 3, 2007.

  1. Clyde

    Clyde Jet Set Tourer Administrator Founding Member

    <!-- headline start --> <table border="0" cellpadding="0" cellspacing="0" width="100%"> <tbody><tr> <td colspan="2">[​IMG]</td> </tr> <tr> <td colspan="2">[​IMG]</td> </tr> <tr> <td style="font-size: 20px; font-weight: bold;" valign="top" width="99%">GM Profit Falls 90 Percent From Year-Ago</td> <td rowspan="3" align="right" valign="top">[​IMG]</td> </tr> <tr> <td colspan="2">[​IMG]</td> </tr> <tr> <td valign="top" width="99%">May 3 02:16 PM US/Eastern
    AP Auto Writer
    </td> </tr> <tr> <td colspan="2">[​IMG]</td> </tr> </tbody></table> <!-- date/author end --><!-- article start --> DETROIT (AP) - General Motors Corp.'s first-quarter profit fell 90 percent compared with a year ago, citing losses in the home lending operations of its former financial arm [LMAO]. It was the second consecutive quarterly profit for the nation's largest automaker, which said in Thursday's report it had record vehicle sales worldwide and improvements in its automotive operations in the latest quarter.
    But the profit of $62 million, or 11 cents a share, for the January- March period was down from $602 million, or $1.06 per share, a year ago.
    Its earnings excluding one-time items fell short of Wall Street expectations and its shares fell nearly 4 percent in midday trading.
    The company attributed the year-over-year decline to losses in the residential mortgage business of GMAC Financial Services. GM sold a 51 percent stake in GMAC to private equity investors last year, but still owns a 49 percent stake in the business.
    "We were able to expand vehicle sales and improve automotive profitability based on the progress in our turnaround initiatives in North America and Europe and our expansion strategy for key growth markets like China, Russia and South America," Rick Wagoner, GM chairman and chief executive, said in a statement.
    "We continue to see progress on the automotive bottom line as we implement the strategies laid out two years ago."
    While the automaker's North American performance improved, the company still lost an adjusted $85 million on its core operations, GM said. A year ago, GM reported an adjusted loss of $251 million in North America.
    Investors appeared skeptical of GM's performance, sending its stock price down $1.28 to $31.16 in midday trading.
    Industry analysts focused on North America, with some questioning whether GM's earnings would continue to be dragged down by GMAC, and whether GM had cut its costs enough[LMAO].
    KeyBanc Capital Markets analyst Brett Hoselton downgraded GM to "Hold" from "Buy" because of the credit deterioration in GMAC's residential mortgage operation. He had rated GM favorably because he anticipated cost savings and better sales from the launch of new pickup trucks.
    Lehman Brothers analyst Brian Johnson also questioned his earlier assumption that GM would see improvement from the rollout of new pickups.
    "Without substantial labor concessions, meaningful improvements in profitability are unlikely in our view," he said in a note to investors.
    GM Chief Financial Officer Fritz Henderson said the company is on track to reduce annual costs by $9 billion this year. But he conceded that more must be done as it heads into national contract negotiations in June with the United Auto Workers union.
    "When we look at the results in North America, it's good to see improvement. It's not good to be operating at a small loss, clearly, given where we are in our product cycle," he said. "Frankly, our business is not generating the kind of returns that we expect, and clearly we have to continue to make significant improvements."
    GM also reported $32 million of special items largely due to restructuring in its Europe and Asia Pacific divisions. Its results a year ago were also inflated by a one-time after-tax gain of $395 million due to the sale of its equity ownership of Suzuki Motors.
    Excluding special items, GM's net income was $94 million, or 17 cents per share, compared with net income of $350 million, or 62 cents per share in the first quarter of 2006. Those results fell short of Wall Street expectations.
    Fifteen analysts polled by Thomson Financial predicted earnings of 87 cents per share, excluding special items.[fnny]
    Henderson attributed the difference primarily to a $115 million loss from its stake in GMAC. The financial company on Wednesday posted a first-quarter loss of $305 million, primarily due to a $910 million loss from its troubled residential loan business. (Woops....callin the FED so the tax payers can bail them out![LMAO][LMAO][LMAO][LMAO][LMAO][LMAO][LMAO][LMAO][LMAO])
    GM's revenue fell to $43.9 billion for the quarter, down 16 percent from $52.4 billion in the same period a year ago. GM said the decline was almost entirely due to GMAC revenue no longer being included in GM's consolidated results.
    Automotive revenue for the quarter was $42.9 billion, down from $43.6 billion a year ago.
    But while automotive revenue slipped, the number of cars and trucks GM sold globally rose 3 percent to 2.26 million in the quarter.
    Henderson said the average transaction price per vehicle rose by about $1,000 year over year, but GM also had production cuts of 192,000 units in North America for the first quarter as it tried to reduce low-profit fleet sales and incentives.
    "Clearly being down 192,000 units is a big headwind," Henderson said. No SHIT sherlock![booze]
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  2. Bear

    Bear Monkey+++ Site Supporter+++ Founding Member Iron Monkey

    pretty sad.... but no worries... the sub-prime/real estate situation is under control... party on![touchdown]
  3. Tango3

    Tango3 Aimless wanderer

    So being in the large( light truck) US automobile industry, while waiting for the impact of the oil peak.AND being in thehousing finance business at the same time is a bad strategy???[dunno]Hear no evil?NO!!
    See no evil?NO!!
    speak no evil?NO!![beat][beat][beat]??
  4. ghostrider

    ghostrider Resident Poltergeist Founding Member

    That's called diversification.
  5. Bear

    Bear Monkey+++ Site Supporter+++ Founding Member Iron Monkey

    Years ago everyone who was selling something, thought it was a "smart" idea to cut out the financial middle men and do their own financing... really easy to start your own bank... really hard to get out of it.... now they are getting burned.... greed always comes back to "haunt" you... and the "hogs" are getting "slaughtered".... (and the big banks and marquee financial houses are loving it).... its a fire sale right now.... notice all the buyout and acquisition offers going on (Dow Jones etc...) All the "weak " hands are "shaking out".... (surprising who those "weak" hands are turning out to be... but again that's incompetent management with their own agendas).... NO!!
  6. melbo

    melbo Hunter Gatherer Administrator Founding Member

    I grew up under the Big 3 and we always saw the automotive industry as the mine canary of the US economy. They can blame whatever they want to blame for falling profits. I think the hen house has been looted and the walls are starting to crumble.

    No one on the teevee will admit to us yet though that the stress cracks in the economic machine are widening.

    lol, one mans diversification is another mans greed. How did they think they (Big 3) could continue to sell autos after shipping out a great portion of the jobs? Who buys light trucks? We are living in non-stustainable times my friends. Something has to give
  7. ColtCarbine

    ColtCarbine Monkey+++ Founding Member

    primarily due to a $910 million loss from its troubled residential loan business. (Woops....callin the FED so the tax payers can bail them out![LMAO][LMAO][LMAO][LMAO][LMAO][LMAO][LMAO][LMAO][LMAO])

    Why not it worked for the airline industry, I don't mind really I don't what's a few more pigs at the trough gonna do anyway, my pockets aren't empty yet. [booze]
  8. melbo

    melbo Hunter Gatherer Administrator Founding Member

    Just found this. party on.

    In GM's 2005 10-K, in the risk factors section, the following statement is made:

    "In addition, the Financial Accounting Standards Board (FASB) has announced that it is considering changes in the accounting rules for pensions and other postretirement benefits. The rule changes that are expected to be proposed in March 2006 would require a company to include on its balance sheet an additional net asset or net liability to reflect the funded or unfunded status, as the case may be, of its retirement plans. In light of the unrecognized losses associated with our pension and OPEB liabilities under existing accounting rules, if these expected proposed rules had been in effect as of December 31, 2005, the substantial additional liability that we would have had to include on our balance sheet would have caused our total stockholders’ equity to be negative."

    The FASB went ahead with that rule change, and now GM's equity is indeed negative. See the line from the bottom, where total stockholder's equity has gone from a positive $14.653 billion to a negative $5.441 billion:
  9. ghrit

    ghrit Ambulatory anachronism Administrator Founding Member

    Yet the stock still sells. Weird.
  10. melbo

    melbo Hunter Gatherer Administrator Founding Member

    greater fool theory?
    I guess you could say that our FRNS are still accepted too. wierd
  11. ghrit

    ghrit Ambulatory anachronism Administrator Founding Member

    I suspect that the "investors" are looking to salvage their losses by losing more. A gambler, I ain't, but Chrysler was bailed out, so might it happen with GM. But Chrysler's recovery took time, and I don't have the patience to wait out a recovery for GM.
  12. Tango3

    Tango3 Aimless wanderer

    The FASB went ahead with that rule change, and now GM's equity is indeed negative. See the line from the bottom, where total stockholder's equity has gone from a positive $14.653 billion to a negative $5.441 billion:

    All from a penstroke change in accounting paperwork rules?Shows how sound money is today, here today, gone tomorrow at the whim of some bureaucrat...
  13. Clyde

    Clyde Jet Set Tourer Administrator Founding Member

    Only the .gov writes rules for itself that do not require it to show the futurer social security, medicaid, medicare obiligations and the correseponding liability.......of about $54 trillion versus $9 trillion. Its a Big F ing Joke.
  14. melbo

    melbo Hunter Gatherer Administrator Founding Member


    Singing the Vegetable Opera

    March 5, 2007
    The jive-finance economy had a few acidic burps last week -- or, at least, that's how it may seem in the days ahead as the equity markets finally upchuck the toxic notional junk "money" they have been gorging on in recent years. Has there ever been a financial collapse with brighter or louder warning signals?

    I suppose the expectation (or hope) is that the quasi-mythical "plunge protection team" -- a "working group" of federal reserve officials and bankers -- will jump in and administer some soothing pepto-bismol, but frankly I don't see how that's possible this time. The poison at the bottom is a fetid mass of "non-performing" mortgages, billions upon billions of loans that strapped borrowers are not paying back, loans which, in the meantime, have been rolled over, rebundled into jive "securities" (ha!) and sold, and rolled over again and used as "leverage" for massive exotic bets and bloated arbitrages involving mere abstract figments of electronic digital pulses completely removed from any reality-based productive investment activity.

    Among the leaders at the supply end of this racket has been General Motors -- that's right, the company that used to manufacture cars, the company about which one plutocrat once remarked what was good for [it] was good for the country. In fact, General Motors' main source of earnings for a long time now has been money-lending, not car-making (which only loses money). They started decades ago with GMAC, their own car-loan operation -- which makes sense if you are serious about selling cars -- but in the 1990s, with foreigners way out-selling GM's shitty cars, the company's financial wizards decided to venture into home loans and thus Ditech was born.

    That's right, Ditech, the outfit that advertised incessantly on TV, promising that house-buyers could sleepwalk their way into mortgage approvals -- and thus frustrate all the smarmy, over-fed, punctilious bankers who obstructed such requests with pain-in-the-ass qualifying protocols and burdensome paperwork. Last week GM put off filing regular required financial reports because of disarray in its Ditech operation. Ditech is responsible for as much as $80 billion in mostly sub-prime house loans -- i.e. given to people with dubious prospects for repayment. But GM's Ditech is but one of scores of entities now choking on non-performing paper (and many of Ditech's rivals are now bankruptcy road kill).

    What makes matters far worse is that all this wildly reckless lending has been in the service of a suburban sprawl-building juggernaut that will itself represent another layer of grotesque liability for the United States. The crash of the house-selling bubble, based on absurd asset inflation for things built badly in the wrong places, is coinciding exactly with a permanent oil crisis that will only exacerbate the locational disadvantages of houses built in the newest and furthest suburbs.

    Evidence now conclusively shows that Saudi Arabia's oil production was down 8 percent in 2006 over 2005, even while the number of oil rigs went up substantially -- indicating that the Kingdom is drilling as fast as it can and still losing ground. (Production slipped from 9.9 million-barrels-a-day to about 8.4 mm/b/d.) Mexico's Cantarell field is crashing (minimum 15 percent annual decline and possibly much steeper rate, meaning in a year or two the US will cease getting oil imports from its number two foreign supplier). The North Sea is crashing, too. Russia is about show steep decline. Iran is past peak. Iraq, as every six-year-old knows, is the world's cluster**** poster child. Indonesia (OPEC member) is now a net oil importer. Venezuela is past peak and full of loathing for the US. Nigeria is collapsing politically. No amount of corn is going save the Happy Motoring utopia, and that's really all our economy is now based on.

    When the financial markets factor all this in -- and they really haven't yet -- I think we'll see a lot more of what they like to call "downside action." These things are all connected. The housing bubble was set into motion by $10-a-barrel oil at the turn of the millennium. Perhaps as much as half the jobs created since then have been in house-building, house-selling, house-buyership-enabling, house furnishing, and other things house-related. The whole final suburban blow-out enterprise has been a fantastic blunder. Now it's unraveling and the only "performing" loans will be the ones paid to the accounts receivable department in hell.

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