GM Loses $3.25b in Q1
And this, folks, is just the beginning. Or the end. Or the beginning of the end. Whatever you call it, however you look at it, GM's $3.25b first quarter financial loss makes a mockery of CEO Rick Wagoner's $14.4m annual compensation, and eliminates any hope that GM's foreign markets can keep the corporate mothership afloat. As Bloomberg reports, the number would have been even more horrific if not for GM's international growth. "GM's European profit grew by more than 18 times to $75 million. The Asia-Pacific region and Latin America-Africa-Middle East region doubled earnings to $286 million and $517 million, respectively." Meanwhile, "GM had an $812 million pretax loss in North America, its largest region, wider than the $208 million deficit a year earlier." And if you think things will be better stateside in the second, third or fourth quarter, what with strikes and tanked SUV and pickup sales, you need to be working at GM. Otherwise, no one will believe you. [Read General Motors Death Watch 175: Phone Calls from the Dead for a full analysis.]
Sorry, but most of this world doesn't have anywhere near the same tastes or preferences we do when it comes to cars. Not even close. As of now, 64% of GM's revenues come from overseas markets. Think about that for a bit. With all the full-sized trucks, SUV's and cars GM sells stateside, the purchasing abroad is nearly twice as much as it is here. That market has grown by 20%. Regardless of whether you like/dislike GM or it's products, that represents an enormous level of success. If you take out GM's one time accounting write-down's, the loss for the General was $.62 a share compared with a forecasted $1.60. They completely blew away 'analyst expectations' which is why the stock is up 10% today. I've said it before, and given today's announcements it's definitely worth repeating. GM does not be the leader in North America to become successful overall. The growth of overseas markets is far more important to their long-term success, and GM will likely build their presence in those markets by investing there instead of here. You shouldn't be bemoaning the death of the General just yet. But the decline of an educated American automotive industry is definitely under way. That is where the real loss lies. As for Toyota, dull vehicles rarely get a strong market base in most countries. They may be a giant here. But abroad, they are often just one of the fish.
Steven Lang, As I understand it, the $3.25B Q1 loss is for GM as a total, not just GM NA. An almost $1B profit on GM's international efforts won't be enough to sustain GM overall unless they can maintain that level of growth for years, while maintaining or reversing the amount of GM NA loss. As KatiePuckrik pointed out, GM was mostly successful in markets where the Japanese manufacturers don't have a large presence. History shows that the Japanese aren't likely to sit around and allow GM to profit unchecked. What, say you, about this? I'm not trying to antagonize; I'm merely a curious onlooker.
my jaws drop when i read this today in the morning paper, then I said to myself, this is only the first quarter. But as funny as this my sound I believe that there are still investors out there that will pour countless amount to money into GM knowing that there nothing in return. GM will still operate even if they are way way below the "RED"