By on May 17, 2010

Well, the suspense is over. General Motors announced its Q1 earnings this morning, and for the first time since 2007 the quarterly numbers are positive. GM’s net revenue jumped to nearly $31.5b on strong performances from its North American and GM International Operations (GMIO), and across-the-board sales improvement for the Chevy brand. General Motors Europe was The General’s sole unprofitable division for the quarter, losing half a billion dollars while it waits for a deal on financial assistance to clear. Operating cash flow was $1.75b, with about $755m of that going towards capital expenditures. That left just under a billion dollars in free cash flow, as GM finished the quarter with $35.7b in cash on hand. Net income attributable to shareholders was $1.068b, less $203m for cumulative dividends, for a total net profit of $865m [Full financial highlights in .doc format available here].

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56 Comments on “GM Q1 Profit: $865m After Dividends...”


  • avatar
    RangerM

    False Profit.

    • 0 avatar
      texlovera

      It’s unfortunate that I immediately have the same reaction. How can we trust GM on anything after their “loan repayed” ad?

      Trust is easily lost and painfully regained.

    • 0 avatar

      One quarter of “reported” profit does not a recovery make. Not by a long shot.

      Gov’t Motors remains alive and unwell, suckling off taxpayers… no matter how the Whitless spin machine presents this info.

    • 0 avatar
      Buick61

      It’s time to stop with all of this.

      Where in GM’s Loan Repayment ad did they say, “We paid this off with entirely new money?” They didn’t. They didn’t lie and there was no trust violated.

      Same thing here. This is a legitimate profit and it’s time, after all of the GM-deathwatches, the Government Motors quips, the nays that have been said, to finally just accept the fact that this company is not going anywhere, it will be successful, and they make, with few exceptions, great cars.

    • 0 avatar
      jjster6

      RangerM… Quarterly financial statements are reviewed, and annual financial statements are audited, by an INDEPENDENT AUDITOR. In the case of GM, Deloitte & Touche is the auditor.

      So before you post “False profit” please get a clue!!! If you can’t believe GM’s results then you can’t believe any other companies either.

    • 0 avatar
      RangerM

      Buick61,

      Tell it to the ones who got screwed in the GM bailout.

      When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that justifies it. – Frederic Bastiat

      jjster6,

      Look up “double entendre”.

    • 0 avatar
      Buick61

      Trust: more would have been screwed if GM went under.

    • 0 avatar
      jjster6

      Ranger M… again you are clueless. NO ONE got screwed on the GM bankruptcy. Investors who lost money KNEW THE RISK, and expect a interset rate to compensate for the risk. Thats why you are cautioned to diversify your risks.

      Old GM had been junk rated for years. Any investor who lost money did so FULLY KNOWING IT WAS A JUNK RATED COMPANY. Everything was legal and fully disclosed.

      You fail to understand what is going on here and have no course but to lash out in idiotic anger!!!

    • 0 avatar
      RangerM

      Buick61,

      Like Bastiat said, “a moral code that justifies it”.

      jj,

      Flame war over.

    • 0 avatar
      geeber

      Buick61: Where in GM’s Loan Repayment ad did they say, “We paid this off with entirely new money?” They didn’t. They didn’t lie and there was no trust violated.

      The ads said that GM has paid back its loans, implying that:

      1. GM had paid back ALL of the money it had received from the federal government. GM was counting on people not knowing just how much money the company had received, and not knowing how the money it received was structured (loans versus government equity in the company).

      2. GM paid back this money by generating sufficient revenue and profit from the sale of new vehicles. This is not what has happened.

      The ads are not technically be a lie, but they are playing fast and loose with the truth, and clearly count on the ignorance of the audience. I’ve had several people tell me that GM has now paid back ALL of the money it had received from the federal government, based on those ads. Which, of course, is false. GM, however, was obviously counting on the ads to generate this perception.

    • 0 avatar
      Steven02

      Geeber,
      That is not at all what the ad implied. Quite literally, it said they have back their gov’t loan. They didn’t say how. They didn’t say that the gov’t gave them more than that they have paid back so far. They didn’t say any else but that they have payed back the loan and did it ahead of schedule.

      The only way now for the gov’t to get more money is to sell ownership. GM got a sweetheart of a deal from the gov’t. You can’t blame them for taking advantage of it to better the position and the get IPO in order.

    • 0 avatar
      geeber

      Steven02: That is not at all what the ad implied. Quite literally, it said they have back their gov’t loan.

      That’s EXACTLY what the ad implied, and, by your own admission, it left out these key facts:

      They didn’t say how. They didn’t say that the gov’t gave them more than that they have paid back so far. They didn’t say any else but that they have payed back the loan and did it ahead of schedule.

      By leaving out these key facts, GM allowed the audience to get the impression that it has paid back ALL of the money it had received, and that GM paid it back through revenue and profits generated by the sale of new vehicles. It obviously worked, based on some of the people that I’ve talked to.

    • 0 avatar
      Robbie

      The Treasury extended $43 billion in bailout cash in 2009 — for a total $50 billion investment. It ain’t *that* hard to make a 0.865 billion profit after that kind of money influx, right?

    • 0 avatar
      Steven02

      Geeber,
      I completely disagree with your assessment. Because GM didn’t say where they got the money to pay back the loan doesn’t imply the money came from profits. You choose to imply that.

      Say you own a business and take out a loan. Soon, you realize you didn’t need the loan and you pay it back from the money you were loaned. Is the bank to assume it came from profits of your business?

  • avatar
    boyphenom666

    Congratulations on a job well done. Now lets start putting that money back into your products so they can be best and most long-term reliable in class. If you do that, the rest will take care of itself.

    • 0 avatar
      educatordan

      That would be a truer road to recovery. If GM can say things like, “Our gaskets cost more than our competitors cause we use higher quality materials.”

  • avatar
    gslippy

    Great news. Now pay me back for real.

  • avatar
    Odomeater

    Great news. GM momentum swinging positive. A very good sign.

  • avatar
    forraymond

    Now if only GM would build a quality, long lasting, attractive little wagon/box on wheels.

  • avatar
    philadlj

    With continued steady profits, let’s hope by the year’s end – or early 2011 at the latest – GM can make an IPO, the government can divest its share, taxpayers can get some checks in the mail, and we can put this dark chapter of American corporate history behind us once and for all!

  • avatar
    CPTG

    Seeing how I have an Accounting 301 Final tomorrow and am being tested on CASH FLOWS and Solvency Ratios, I want to know:

    1. GM’s Current Cash Debt Coverage Ratio (Does GM have sufficient cash, as provided by Operating Activities, to meet its Current Obligations [Liquidity])?

    2. GM’s Cash Debt Coverage Ratio (Is GM generating sufficient cash, provided by operating activities, to meet its long term obilgations [Solvency]).

    Knowing the Free Cash Flow is nearly next to worthless. That ratio is used by investors to check on things such as expansion ability and dividends payment ability. The LAST thing we want GM doing is ‘expanding operations’ or ‘paying dividends’—GM needs to be able to run without wooching more money from the Public teat WHILE repaying the Billions it has already borrowed and burned through.

  • avatar
    wsn

    Who would treat it seriously? They didn’t sell more cars and didn’t lay off a significant number of workers.

    Just typical GM creative accounting. What they do is like this:
    1) lose money
    2) kick the “cost item cans” down the road and report a profit
    3) report a massive “one time” loss when enough cans are accumulated
    4) go back to step 1

    Yes, they can report a “profit” once in a while, but they can’t avoid a massive “one time” loss every year.

    • 0 avatar
      John Horner

      How can you say they “didn’t sell more cars”? Did you bother to look at the audited report? I’m not going to do your homework for you, but here is a hint: Look up the numbers 2,085,000 and 1,330,000 in the report http://images.thetruthaboutcars.com/2010/05/Q1-2010-Highlights-Parts-2-and-3.doc .

      Everyone is entitled to their own opinions, but not to their own facts.

    • 0 avatar
      wsn

      Fact 1: I did.
      Fact 2: GM sold far fewer cars now as compared to pre-bailout (which is 2008).

      If GM’s can’t survive on a 3-million/year US sales in 2008, what makes you think it’s doing well selling 660k in the 1st four month of 2010?

      Show me your facts or opinions.

  • avatar
    cmoibenlepro

    What are cumulative dividends? New GM paid dividends?

    • 0 avatar
      jjster6

      GM paid dividends on its “preferred stock,” not its “common stock.” Preferred stock is more like debt than equity (its really a hybrid of the two). Preferred stock guarantees dividends (so it’s like interest on debt). Common shares get dividends when the directors declare them and are usually paid when the business is genearating mor cash than it is using.

      Note also those preferred dividends got paid to the owners on them… the US and Canadian governments. The investment in GM is paying off. Just don’t expect it all in one lump sum.

  • avatar
    jkross22

    Buick61: Biased much?

    GM’s ad was similar to Bill Clinton’s “it depends on the definition of what ‘is’ is” moment with that ad that was completely misleading. Based on your screen name, I understand why you won’t acknowledge yet another breach of trust by GM leadership.

    Following that thought, it makes sense that you would want to accept GM’s pronouncement of profitability as is. Unfortunately, GM has taught us that we ought not accept what they say prima facie.

    • 0 avatar
      jjster6

      You shouldn’t accept anything any company says “prima facie.” That’s why the Financial Statements are audited.

      And why does everyone accept the financial statements as correct when they show a multi-billion dollar loss, but they are lying when they show a billion dollar profit? Could it be that people see evil intent in the things they don’t understand?

    • 0 avatar
      geeber

      jjster6: And why does everyone accept the financial statements as correct when they show a multi-billion dollar loss, but they are lying when they show a billion dollar profit?

      Because GM has more incentive to lie about posting a profit than it does about posting a loss, and even when GM did post a loss (as it did for several years in a row), there were numerous problems with its accounting.

    • 0 avatar
      jkross22

      jjster, This is normal skepticism specifically with GM, as they have a history of playing it fast and loose with their reported financial performance. I understand my biases against GM, but I’m wondering for those that consistently defend GM if the same is true of themselves.

    • 0 avatar
      jjster6

      jkross… I am not supporting GM in any way. I am simply pointing out that many people are misrepresenting what the GM financial statments say. The financial statments are audited and in accordance with US GAAP. And US GAAP is simply a measuring tool that every US publicly traded company (and others) needs to use and readers NEED TO UNDERSTAND. It has its limitations, but it is a system that ensures companies results are comparable. AND IT IS REQUIRED BY SECURITIES LAWS. So are your criticizing GM for complying with the law? You don’t understand that… you call it “Fast and loose with the truth.”

    • 0 avatar
      geeber

      What people apparently don’t “understand” – or choose to convienently forget – is that GM had to go back a few years ago and rework its accounting statements that were supposedly in compliance with all applicable laws. And now GM has even more incentive to be fast and loose with the truth.

    • 0 avatar
      Steven02

      Geeber,
      The same people aren’t running the show and are under a huge microscope. If Wagoner was still in charge, I would agree with the idea that the statements could be bad. That just isn’t the case today. Also, GM doesn’t have a lot to gain by posting a profit that doesn’t exist. GMs IPO doesn’t really benefit them at all. It benefits the gov’t and other minority owners.

    • 0 avatar
      mdh

      @jjster6 Right… Audited Financials = confidence & trust… just like Enron & Lehman.

    • 0 avatar
      jkross22

      jjster,

      Please re-read my post. I said that GM has a history of playing it fast and loose with the numbers. This is true. This is not opinion. How many times have they needed to ‘restate’ numbers? They had Rattner look at the books and say something to the effect of, “I’ve never seen such disarray at a company this large.”

      You are proving my point about GM defenders… ignore the past or call it opinion and hope no one takes notice.

      This attitude, ironically, does more to hurt GM’s future chances than simply coming clean. Americans are very forgiving, but we have a hard time forgiving liars.

  • avatar

    If the cars my brother and I saw 3 weeks ago at a Chevrolet dealership are the “quality products” of the new GM then there are a lot of people out there with low automotive standards. We went shopping for a Malibu advertised in a newspaper promotion and were told it’s not available anymore and were up-sold to a version $7000- more (same old sales scams). The 2010 Malibu that we test drove had creaky plastic all over with a strange metallic thump from the front end. I complained about it and was told that the tires may be low on air. My 2005 Civic has 130,000 kms and is much tighter and quiet than the 2010 Malibu. Huh?
    What really impressed me was the new Camaro in the showroom with the same lousy orange peel paint job that my 1981 Camaro had when new. The trunk has a 3/8″ gap on one side and less than a 1/4″ on the other and there was insulation hanging down from under the dash visible when opening the driver’s door. First impressions mean a lot and mine was of a car built to look good but very tinny and cheap materials all round.
    Who is buying the new GM cars-certainly not anyone who has owned a few Honda products.

    • 0 avatar
      GarbageMotorsCo.

      Good to hear the quality of paint on Government Motors vehicles continues to be atrocious.

      My trucks had rusting bumpers and undercarraiges by the time the warranty expired. Unacceptable when I paid more than 40 grand each for them.

      And all along I thought the transmissions and rear ends were the worst problems I had. The paint finish was MAACO quality.

  • avatar
    Quentin

    They damn well should have shown profit. They essentially had all their debt slashed away while keeping the things that make money (vehicle designs and means to manufacture them).

    My yearly financial report would look fantastic, as well, if I were able to get rid of my mortgage, keep my house, and continue working my job.

    • 0 avatar

      “My yearly financial report would look fantastic, as well, if I were able to get rid of my mortgage, keep my house, and continue working my job.”

      Exactly. That sums up nicely all my reasons for disdain against Government Motors.

      Anyone purchasing a GM vehicle today is only enabling irresponsible behavior, and should be ashamed.

  • avatar

    Deloitte is a bag of scoundrels who cannot and should not be trusted. it remains to be seen if there are disclosed “material weaknesses” in internal controls like the past few years’ financials. be aware there was no audited statement for last year, God only knows what they got away with without having to disclose operations. most likely worse than the Fiat Fiasco wherein RIR siphoned off Billions.

    where are the “one time charges” and the same old stuff Red Ink Rick was famous for, such as off balance sheet accounting, variable interest entities, etc….don’t forget he was put there by special interest (banks) and was a liar in the worst sense of the word.

    the banksters ruled GM for years (Morgan, Deutsche, Goldman, BOA, Merrill), stripped it of assets before putting it into BK, now to reclaim it devoid of liabilities like health care, environmental concerns, pensions to Delphi salaried retirees, and franchise agreements.

    the income news is a plus but expected so they can issue the float and take back control. remember these are the guys from Goldman et al, trust them…I certainly do not.

    • 0 avatar
      jjster6

      “Deloitte is a bag of scoundrels…” Your facts please?

    • 0 avatar
      CamaroKid

      Facts?

      How about this lawsuit where it was basically proven that Deloitte helped GM lie about their financial statements..

      http://www.usatoday.com/money/autos/2008-08-08-gm-settlement_N.htm

      Does a 1/3 of a Billion screw up count as a “bag of Scoundrels”?

      If not a bag, definitely two large scoops of scoundrels.

  • avatar
    mikey

    This is the best news I’ve heard in a long time.

  • avatar

    and we have an ex CEO hired by the same outfit, Axis Partners, who are “guiding” asset disposal. meanwhile our friend Fritz is back on the dole as a consultant while also working for Jay. can you find a better definition to conflict of interest? if it wasn’t a conspiracy, there would certainly be an investigation.

  • avatar
    Sinistermisterman

    Fudged figures or not, GM making a profit is the only way that US & Canadian taxpayers will ever get their money back. So as much as I am inclined not to trust these figures, I *hope* that they are correct and that this is the beginning of the turn around.

    • 0 avatar
      jkross22

      I agree with you. To get our money back, many, many individual and corporate investors will have to believe that GM will survive without sitting at the taxpayer trough and that the ROI is there to justify buying stock.

      Maybe GM could try selling some bonds. Oh wait….

  • avatar
    werewolf34

    Figure are before or after bailout money? 664MM profit / 80 Bn injection is a pretty crappy return

  • avatar
    Vetteman

    Every thing they do this year will be guided by the primary goal of haveing a succesfull IPO . They want the pension funds and mutual funds and index funds to buy the shares . So many naive folks may consider buying the shares . I remember friends buying the Delphi IPO who rode it all the way down. Wall street will make huge commisions and fees as they sell these shares . I worked for over thirty years for a GM dealer and learned the hard way that the company is not to be trusted and operates from an area of dishonesty. I would not believe any of their numbers . As for big Ed Whitaker would you buy a car from this man.

  • avatar
    ihatetrees

    Ok. GM’s got a profitable quarter.

    But there are serious long term storm clouds on the horizon. Competition (Hyundai, an improved Toyota?), an uncertain political climate (a more GOP congress more willing to shiv GM), and the UAW, while currently quiet, still exists.
    It’ll be interesting to see how economically retarded the UAW’s next GM contract will be. Bob King, Gettlefinger’s successor, threw out some verbal cancer in today’s WSJ, stating, “Where there’s equality of sacrifice, there needs to be equality of gain.”

    • 0 avatar
      boyphenom666

      some verbal cancer in today’s WSJ, stating, “Where there’s equality of sacrifice, there needs to be equality of gain.”

      I am rooting for GM to succeed, but this statement reminded me why to never own stock in any of the automakers again. There is another interesting article I read stating that even with the new contract, they still don’t have parity with Toyota. These people never learn their lesson, do they?

      Shoot me if I ever buy any stock in the Beg-3, please.

  • avatar
    Loser

    I don’t want to jump on the GM bash wagon but did anyone else notice the fleet sales numbers?

    U.S. Retail/Fleet Mix 2010 vs 2009

    % Fleet Sales – Cars 40.6% vs 19.9%
    % Fleet Sales – Trucks 24.5% vs 15.2%
    Total Vehicles 30.9% vs 17.1%

  • avatar
    Odomeater

    “Who is buying the new GM cars-certainly not anyone who has owned a few Honda products.”
    “Good to hear the quality of paint on Government Motors vehicles continues to be atrocious.”
    Do we really need anecdotal stupidity from the usual suspects? I realize its a tough time for the haters. I feel your pain.

  • avatar
    kevbelz

    I don’t really get why everyone is talking about taking a bath on GM investments.. I bought their bonds for pennies on the dollar while they were going bankrupt for the months it took to finally declare..
    I got paid dividends that nearly covered my investment, bringing my cost on the bonds to nearly zero.. and now I am the only owner (outside of the US Gov’t) of the new soon to be issued stock. The bonds I bought for $2 and $3 ARE currently trading at $8+, and can still be bought. Actually it is the only way to own the future stock..
    How many Large Cap funds are going to NOT buy this stock on day one..(hint, answer is between 1 and 2)

  • avatar
    porschespeed

    After actually reading the financials (which presaged GM’s eventual death in the 70s) I’m thoroughly amused that anyone saw a ‘profit’.

    kevbelz, good luck. Perhaps it’ll work out for you – on the taxpayers dime.

    GM is a dead man walking. Anyone with their head outta their ass knows it.


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