Thursday, May 7, 2009

G.M. Posts a Quarterly Loss of $6 Billion - Will someone please turn-off the lights and lock the door?

So let's review a few of things:

- G.M. has borrowed $15.4 billion from the government (should read taxpayers)

- G.M. lost $6 billion in the first quarter

-G.M. says it needs $11.6 billion more

They want to borrow 11.6 billion more, which they will just lose in another 2 quarters if they continue losing $6 billion a quarter?

G.M. hasn't come close to stopping these outrageous quarterly losses. It is insane to continue to keep pouring money down the drain trying to keep the company afloat.

from The New York Times
By Nick Bunkley
May 7, 2009

DETROIT — General Motors, which faces a June 1 deadline to cut debt and expenses or else file for bankruptcy protection, on Thursday said it lost $6 billion in the first quarter.

G.M. said it depleted $10.2 billion from its cash reserves in the quarter, or $113 million a day, leaving the company with $11.6 billion as of March 31. That is roughly the minimum amount of liquidity needed to keep G.M. in business, the automaker has said.

“Our first-quarter results underscore the importance of executing G.M.’s revised viability plan, which goes further and faster to lower our break-even point,” G.M.’s chief executive, Fritz Henderson, said in a statement.

The first-quarter loss, equal to $9.78 per share, is the eighth consecutive quarterly loss for G.M. A year ago, the company lost $3.3 billion, or $5.80 a share.

Excluding special items, G.M. lost $5.9 billion, or $9.66 a share, which is better than the $6.7 billion that analysts were expecting the company to lose.

Revenue fell 47 percent to $22.4 billion due to a 40 percent drop in global sales during the quarter.

G.M. has borrowed $15.4 billion from the federal government since December to stay afloat, and the company says it needs $11.6 billion more. But the chances that it will end up in bankruptcy court at the end of this month are growing, particularly after Chrysler’s Chapter 11 filing last week.

Mr. Henderson, who took over running the company after the Obama administration forced Rick Wagoner to resign a month ago, has said bankruptcy is a probable outcome for G.M. but one that executives still hope to avoid.

G.M. is resuming negotiations with the United Automobile Workers union on Thursday as it seeks a deal to cut labor costs before the government’s deadline. The company also has offered to swap equity for more than $27 billion in debt held by bondholders, but analysts are skeptical of the chances that enough of the bondholders will accept the deal.

Under a plan unveiled last week, G.M. would give a majority stake in a restructured version of itself to the Treasury Department and more than a third of the company would be held by the U.A.W.’s new retiree health care fund.

Bondholders would own roughly 10 percent and existing shareholders would account for just 1 percent of the new company. G.M. is planning a reverse stock split, which would turn every 100 shares outstanding into one new share. Shares of G.M. have lost more than 90 percent of their value in the last year as the company has descended toward a possible bankruptcy.

As part of its restructuring, G.M. now says it will, by the end of 2010, cut 21,000 factory jobs, close 13 plants and get rid of about 2,600 dealerships. More job cuts and plant closings would occur in later years.

G.M. intends to slash its brand portfolio in half, by closing Pontiac and trying to sell Saturn, Saab and Hummer.

“This is a defining moment in the history of General Motors, and we are committed to our plan, which we believe will lead to a stable and sustainable operating structure with a strong balance sheet,” Mr. Henderson said. “Our goal is to fix this business once and for all to position ourselves to win in the long-term.”
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