There is talk in the financial press that General Motors, which has been giving and getting lots of good news for over a year, is facing some difficult times. Bloomberg:
Through three quarters, Detroit-based GM made more money than in any year since at least 1987, excluding extraordinary gains related to its bankruptcy. It added market share in the U.S. while cutting discounts and took back the title of world’s largest automaker from Toyota Motor Corp.
But some diseased chickens are coming home to roost. One is the mess at Opel, GM’s European division that CEO Akerson decided to keep when he took office (big mistake), and the “biggest contributor to GM’s $14.7 billion in European operating losses since 1999,” says Automotive News.
The other big bleeder is GM’s underfunded pension plans—$22.3 billion in the red at the end of 2010. Morningstar, among others, recommends that the company begin putting excess cash into this gaping hole rather than increasing its dividend.