Monday, November 16, 2009

GM Shows Improvement, Only Loses $1.15 Billion

GM posted a $1.15 billion loss for the shortened third quarter and confirmed plans to accelerate repayments to the US and Canadian governments. The good news is that this loss was better than the $2.5 billion it punted last year. Furthermore, the automaker actually had positive cash flow to the tune of $3.3 billion instead of burning through $6.9 billion, like it did in last year's third quarter. But still, the automaker supposedly shed its burdensome cost structure in bankruptcy, emerged from Chapter 11, benefited from the government's massive cash-for-clunkers subsidy and it still lost money? Sorry, but color me not wildly impressed by this quarter's earnings report.

Nevertheless, an improvement is an improvement, so I'll give GM bonus points for that. Unfortunately, GM lowered its expectations for US auto sales in 2010 to 11 million to 12 million from the 12.5 million forecast in April. It expects global sales to come in between 62 million and 65 million sales. As for the loans that GM is planning to pay back to the US and Canadian governments, it will use other money it received from the government to pay back the borrowing. Just like a ponzi scheme, but it only requires one eager participant.

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