General Motors swings to a massive second-quarter loss

GM swings to massive second-quarter loss

By Shawn Langlois, MarketWatch

Last Update: 8/1/2008 7:45:00 AM

SAN FRANCISCO (MarketWatch) — General Motors Corp., scrambling to right-size its
operations and shift production toward smaller cars, reported Friday another
massive loss as customers’ shift away from its profitable truck and SUV lines
gathered momentum.

Before the bell, GM (GM) said it swung to a second-quarter loss of $15.5 billion,
or $27.33 a share, from a year-earlier profit of $891 million, or $1.56 a share.
Revenue for the quarter fell 18% to $38.16 billion.

Excluding $9.1 billion of special items, notably a special attrition program for
North American hourly workers and an adjustment to its Delphi Corp. reserve, GM
would have lost $6.3 billion, or $11.21 a share, hurt by industry volume declines
and shifts in volume mix, the long strike at American Axle & Mfg. and large
lease-related charges.

Analysts polled by FactSet Research were looking for a loss, on average, of $2.85
a share with total revenue pegged at $42.6 billion.

For the year, Wall Street previously targeted a loss of $5.86 a share, with no
annual profit projected until 2010.

Shares of GM, part of the Dow Jones Industrial Average, traded down about 6% in
the premarket.

In the past month, GM’s shares have tested levels not seen since 1954, with
plunging sales and fears of a cash crunch leading to concerns over a potential
bankruptcy. GM eased some of those concerns on July 15, when it announced plans
to raise $15 billion in liquidity by cutting its dividend, reducing salaried
costs and considering more asset sales.

In an interview on CNBC Friday morning, GM Chairman and Chief Executive Officer
Rick Wagoner said he was “comfortable” with the company’s liquidity.

GM’s shares have skidded 56% in the year to date, compared to a 14% decline for
the broader blue-chip Dow industrials as record-high gas prices and the prolonged
U.S. housing slump continue to stymie sales of the company’s most profitable
vehicles.

Shares of rival Ford Motor Co. (F) dropped 15% last week after the company
reported a loss of $8.7 billion and announced more aggressive measures to retool
its business.

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