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from:GM posts quarterly net loss of $4.8 bln [Reuters, 8:02AM Jan 26, 2006]
Reuters
GM posts quarterly net loss of $4.8 bln
Thursday January 26, 8:02 am ET


DETROIT (Reuters) - General Motors Corp. (NYSE:GM - News) on Thursday posted a quarterly net loss as it struggled with high costs, shrinking market share and sluggish sales of sport utility vehicles.
The world's largest automaker reported a fourth-quarter net loss of $4.8 billion, or $8.45 a share, compared with a loss of $99 million, or 18 cents a share, a year earlier.

Excluding one-time items, the company posted a loss of $2.09 a share. On that basis, analysts, on average, expected a loss of 4 cents a share, according to Reuters Estimates.

Revenue fell to $51.2 billion from $51.4 billion a year earlier.

The auto giant has been facing high labor and raw materials costs, loss of market share to foreign rivals, and disappointing sales of high-profit SUVs
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do I smell bankruptcy ?
uh...
 

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Also the actual losses in the automotive business is more like $1.5 Billion. GM included some "special charges" in that report, which is largely money it suspects it will be obligated to pay towards Delphi's former GM employee's retirements from when they spun Delphi off.

It looks like they decided to report that loss now, ahead of time, so that they have a better chance of reporting gains in the first quarter of 2006, and for the year of 2006. In other words, since they lost in 2005 anyway, they accounted for some future losses upfront to start the new year fresh.

GM is still far from any kind of bankruptcy filing, since they still have many, many billions in cash reserves.
 

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Fformula88 said:
GM is still far from any kind of bankruptcy filing, since they still have many, many billions in cash reserves.
Agree. However, I think they are moving in that directions, slower or faster.


GM is not alone. Ford and GM are already at Junk status as far as credit, making it harder for them and their suppliers to get bank finances (really high rate). Ford is now further down the junk credit line. It also lost $1.4 Billion for most of 2005.
 

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TastyBake said:
Agree. However, I think they are moving in that directions, slower or faster.


GM is not alone. Ford and GM are already at Junk status as far as credit, making it harder for them and their suppliers to get bank finances (really high rate). Ford is now further down the junk credit line. It also lost $1.4 Billion for most of 2005.
True, anytime a company is posting consecutive quarterly losses they are heading in the direction of bankruptcy. However, there seems to be a feeling that a bankruptcy is really close, and I just don't see it that way. Estimates I have seen indicate GM can operate for 3+ more years with their current rate of losses based on remaining cash reserves.

That isn't too far down the road, but it also gives GM has time to turn around their finances. They are making cuts to expenses already, have had success with some of their most recent product launches, and are about to roll out their new full size trucks and SUV's which will be very profitable if they are well received.

Gas prices are hurting the growth of the big truck segment, but there are still plenty of buyers in that segment. How well these trucks do will probably be the deciding factor in whether GM can avoid bankruptcy.
 

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Heck I work for a huge company that, for five quarters, had to take LOANS to pay dividends (so their stock price would not collapse.). Money was rolling out like water.
Now, 3 years later -- posted ther biggest quaterly gain in the history of the Company. If managed well, any company can turn around. Back in the 1970's we had the same thing and Chrystler went under... Gee we miss them.. Oh, wait they are still here!
 

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Fformula88 said:
True, anytime a company is posting consecutive quarterly losses they are heading in the direction of bankruptcy. However, there seems to be a feeling that a bankruptcy is really close, and I just don't see it that way. Estimates I have seen indicate GM can operate for 3+ more years with their current rate of losses based on remaining cash reserves.

That isn't too far down the road, but it also gives GM has time to turn around their finances. They are making cuts to expenses already, have had success with some of their most recent product launches, and are about to roll out their new full size trucks and SUV's which will be very profitable if they are well received.

Gas prices are hurting the growth of the big truck segment, but there are still plenty of buyers in that segment. How well these trucks do will probably be the deciding factor in whether GM can avoid bankruptcy.
On the other hand, (the flipside of the argument - not that I support it, but what other people have counterargued with me about...) some people subscribe to the "loss begets loss" hypothesis, or the thinking of the "downward spiral".

They even point to fourth quarter sales as an indicator: F, GM, DCX all posted volume losses from last year ranging from 8% to 15%.

Honda, Toyota, Nissan posted sales volume INCREASES ranging in the +8%+15% range. Toyota gained significant market share in the US in the fourth quarter. GM came in below 25% for the fourth quarter.... Not good.

IF this signals to buyers that GM might not be around, or their products just aren't competitive, then it may lead to more lost market share to competitors. This self-fulfilling prophecy facilitates the death spiral - less people buying GM and/or US products... because less people are buying GM and/or US products.

The human psyche (or so the hypothesis goes) thinks that "since nobody is buying X, then there must be something wrong with X, and since everyone is buying Y, then Y must be the product to have". Substitute Y="worthless hybrid vehicles that don't do a thing for the environment", and you might be onto the current automotive market. :lol: :willy:

OK - I'm exaggerating a bit, but not that much... In this case, what appears to be just large turbulence ends up being the cool-air windshear drop of an unseen super-cell thunderstorm....
 

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Rick Tinley Park said:
... Back in the 1970's we had the same thing and Chrystler went under... Gee we miss them.. Oh, wait they are still here!
Yeah, they're here, but now they have been absorbed by a German company. All the employees have to wear lederhosen and must eat schnitzel for lunch...

...OK, I'm exaggerating again... but not THAT much... :lol:
 

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The big three are also paying for their reliance on high margin SUV's and not working to improve the efficiency and attractiveness of their high efficiency cars. The $2-$3 gas prices have hurt the big three cash cows (SUV's) and the best economy cars are made by the Japanese and Koreans.
 

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refered to www.notgonnahappen.com

GM has suffered setbacks before. The day they go bankrupt I will be hosting
a Ski Trip in hades (on me) =)
 

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TexaSky said:
The big three are also paying for their reliance on high margin SUV's and not working to improve the efficiency and attractiveness of their high efficiency cars. The $2-$3 gas prices have hurt the big three cash cows (SUV's) and the best economy cars are made by the Japanese and Koreans.
This was the case with gas crisis in the early 70's and then again with the gas crisis of the late 70's, except they were cars that were as heavy and gas guzzling as a Hummer. Deja Vu all over again! :banghead:
 

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KappaMan said:
Yeah, they're here, but now they have been absorbed by a German company. All the employees have to wear lederhosen and must eat schnitzel for lunch...

...OK, I'm exaggerating again... but not THAT much... :lol:
Maybe GM will be taken over by a Korean or Japanese company and they will be forced to wear gi's and eat stir fry :lol: Or am i exaggerating :lol:
 

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Update:
http://yahoo.reuters.com/financeQuo...tfh48401_2006-01-09_20-54-40_n09168790_newsml

Now this worries me. Basically, GM is looking into selling GMAC, their financing company. GMAC was the sector that made the most profit (if not the only one) within GM. GMAC basically saved them.

Now their strategy is to sell the one thing that makes them money so they can get out of Junk status? I disagree with this strategy.

Let’s say they sell GMAC, get out of junk status, and get lesser financial fees. Do they have a strong plan to make sure they don’t hop back to Junk? I can imagine the fees are ridiculous but there must be other ways to get them out of Junk status than this.

Hmmm….Maybe they needed to do this ASAP so Delphi doesn’t become bankrupt from dealing with GM.
 

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richmcc said:
This was the case with gas crisis in the early 70's and then again with the gas crisis of the late 70's, except they were cars that were as heavy and gas guzzling as a Hummer. Deja Vu all over again! :banghead:
Agreed. However, I don't totally blame the big three. I blame the demand also i.e., the consumer.

The demand for SUVs were enormous and the demand for efficiency cars became lower. We (generally speaking) wanted SUVs, even when gas prices were high back then. Heck, we still do. “Don’t waste time with those econoboxes like those other companies. We wanted big and want power.”

So. they had to jump on that bandwagon and flood the market saying “here!, here!. here!”. Noone (they or us) anticipated gas hikes. What the big three should have done was be realistic and still invest in alternative fuels like the demand was going to raise. Hard to allocate money when noone cared.

Same thing happened in the 70's but noone anticipated the embargo(s). Gas was pocket change per gallon. Ford offered a 4 cyl 30 mpg car back then saying "Hey gas could go up, ya know", folks would have laughed at them.
 

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TastyBake said:
Agreed. However, I don't totally blame the big three. I blame the demand also i.e., the consumer.
Yes, but somehow the Japanese did not manage to fall into this trap, again and again, but US Car Companys did, how come?
 

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richmcc said:
Yes, but somehow the Japanese did not manage to fall into this trap, again and again, but US Car Companys did, how come?
I think the Japanese work the hardest on the cars that work in their market...the small cars. Hummers and Escalades don't fit very well into their infrastructure. Honda and Toyota just recently got into the truck business, but that was just to sell over here in "bigger is better USA."
 

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richmcc said:
Yes, but somehow the Japanese did not manage to fall into this trap, again and again, but US Car Companys did, how come?
The Japanese culture can't relate to having big cars and trucks, large space in a city, and long open plains to drive hard around since Japan is a smaller land in comparison to America. Hence they constant concentration in smaller commuter cars. Also, the Japanese automakers don't have the experience we have in large, high torque engine vehicles (ex. engine size in Toyota trucks). They stuck to what they know made small SUVs.

Just my educated guess. Sure this is debatable as Detroit and Japan share their stuff all the time and there is no super firm line between the two.

One thing for sure is because they stuck to small SUVs and and making better MPG (even when folks cared less) it paid off at the end.

Detroit probably needs to break off of the tradition of Bigger engine means better. I am seeing this trend in them.
 

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TexaSky said:
I think the Japanese work the hardest on the cars that work in their market...the small cars. Hummers and Escalades don't fit very well into their infrastructure. Honda and Toyota just recently got into the truck business, but that was just to sell over here in "bigger is better USA."
Opps, didn't read this. We said exactly the same thing, except you said it with less words :D.
 

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It wasn't that many years ago that Nissan was in financial trouble! Looked like we'd loose them. They turned it around. Chrysler was also turned around and it wasn't until some years later that they were bought out!

GM will be around for a long time if the Execs want to keep their jobs. Change will be demanded and change will come. If not then yes they die right? No someone will come in and pick up the pieces.

I suspect that our grand kiddies will be buying GM cars years from now. GM has started making changes to price and product. Also to the structure of the company. Look for more to come!

I suspect they will lower their prices and offer more fuel efficient choices in the product line. Perhaps as one post suggested they may even drop a line or two.

I think droping ugly lines like the Avalanche may also help.

BTW I really don't care who owns the company American or Japanese I just care where the jobs are. The last two cars I have purchased were made in North America! Actually both were made in the US of A. Canada and the US purchase cars made in each others countries. How many Japanese and European's drive cars made in North America???

We need to fight for our market share. If they won't buy North American or if they don't have a plant in North America then perhaps we should think about that.

As for the auto makers they need to put their money where their mouths are and put North American parts in the cars they produce! I was supprised to find that my '82 Ranger had a transmission made in Japan!

Saturn seems to have recognized that there is a problem. I would never have purchased a Saturn before. I didn't like the product line. The style wasn't for me. And here I am. I've put $1000 down on a car I've never driven. Hell I've never even seen one live and in person.

And with all the demand the Sky is creating, Many dealers have stuck with the Saturn way of pricing and selling their cars. Good for them! I hope Saturn is trail blazer for GM.:thumbs:

Good Luck GM:cheers:
 

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I think that all you have to do is read the Solstice and the Sky forums to see why the big three build the cars they do. We ourselves are consumers who have been asking for more power, turbo, supercharged, hey even a V8. These use more fuel maybe not like a SUV but more than the base model just an opinion:)
 
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