General Motors released its third-quarter figures yesterday, and the way in which these were reported by the media is pretty interesting. Bloomberg headlined the fact that the company “generated $3.3 billion” in cash; the NY Times said, “G.M., Citing Progress, Reports Loss of $1.15 Billion”; and CNNMoney came out with, “GM to start repaying debt to U.S.” You pays your money and takes your choice.
Well, folks, I am surely no financial reporter, but some things are abundantly clear through the murk of all these numbers. First, these results, the first since the company came out of bankruptcy on July 10, are basically good news. GM’s third-quarter 2009 revenue was $28 billion, up $4.9 billion from the “old GM’s” previous quarter. Cash for Clunkers helped; so did strong sales in China and Brazil.
And the company did start paying back its government loans five years before due. One must note, however, that the anticipated payment of $1 billion to the Treasury and $192 million to the Canadian and Ontario governments is “only a fraction of the $50 billion in help GM received from U.S. taxpayers since the end of 2008,” according to CNNMoney.
At the same time, losses continued overall (down 25 percent) though at a reduced rate. And the company will burn through some $8.3 billion next quarter on debt repayments, restructuring, etc., so the financial serendipity won’t likely continue. GM predicts U.S. SAAR (seasonally adjusted annual rate) as 11-12 million for 2010, which seems to me overly optimistic, to say the least. But U.S. car sales across the board in October were finally out of the red for the first time since 2007.
As if to thumb its nose at GM, competitor Ford reported a third-quarter profit of almost $1billion, along with an improved market share. Anyhow, Fritz Henderson et al. have some reason to be happy.
Do you think GM’s “improvement” will continue? They have tough numbers to face—and tough odds as well.