GM Earnings: Will Taxpayers Make Money on GM?

Last Updated Nov 10, 2010 8:55 AM EST

General Motors earned $2 billion in the third quarter, or $1.20 a share, after adjusting for a 3-for-1 stock split, as revenue rose 20 percent. Compared to the loss of 73 cents a share in the period of July 10, 2009 to Sept. 30, 2009, the results should make Uncle Sam happy--the government currently owns 61 percent of GM.


A few more notes from the report:

  • It was the third-straight quarterly profit and the most profitable quarter since the automaker emerged from bankruptcy
  • The company expects to report profitable year-end results for 2010
  • North American operations checked in with an operating profit of $2.1 billion
  • The European unit lost $559 million
  • The international unit, which includes China and India, earned $646 million
  • The company now sells more cars in China than it does in the US
The results are encouraging, ahead of the company's plan to go public next week. In IPO on November 18th, GM will seek to raise $13 billion by selling common and preferred shares of stock.The majority of the proceeds will go to its existing shareholders, not the company, including Uncle Sam. The IPO is expected to reduce the US Treasury's stake from 61 percent to approximately 40 percent.

Here's the big question: will taxpayers make money on GM? That depends--like any investment, we need to see the average price at which we sell our stake.Treasury intends to space out the remaining sales of stock over the next few years. Analysts believe that if the price of the stock doubles from the IPO price, we just might break even on our investment, which would have to be considered a big win.

Image by Flickr User SKY Tripper, CC 2.0

  • Jill Schlesinger On Twitter» On Google+»

    View all articles by Jill Schlesinger on CBS MoneyWatch »
    Jill Schlesinger, CFP®, is the Emmy-nominated, Business Analyst for CBS News. She covers the economy, markets, investing and anything else with a dollar sign on TV, radio (including her nationally syndicated radio show), the web and her blog, "Jill on Money." Prior to her second career at CBS, Jill spent 14 years as the co-owner and Chief Investment Officer for an independent investment advisory firm. She began her career as a self-employed options trader on the Commodities Exchange of New York, following her graduation from Brown University.