GM Surprises Wall Street
General Motors Corp. earned $225 million in this year's first quarter after special charges, down sharply from $1.78 billion a year ago as a nagging slowdown in U.S. auto sales chewed into profits. The results still were double what Wall Street expected.
The world's largest automaker said it earned 50 cents a share, compared to $2.80 a share last year. Analysts had expected the automaker to earn 26 cents a share, according to Thomson Financial/First Call.
On Wall Street, stock prices were higher in early trading, where there's a growing sense of optimism due largely to Intel's buoyant outlook for the second half of the year.
The market has also gotten better-than-expected earnings reports from Motors, Coke, JP Morgan Chase, AOL Time Warner and Tyco International as well as GM.
On the minus side, quarterly profits by US Airways, UAL and Delta all missed Wall Street estimates. And Hewlett-Packard is slashing 3,000 management jobs and sharply reducing its forecast for second-quarter earnings.
GM's revenues totaled $46.2 million, down from $46.9 billion in the same quarter last year, when U.S. sales were headed for a record.
GM said its automotive operations earned $20 million, compared with $1.5 billion a year ago. GM's North American unit saw its earnings drop, from $1.3 billion to $120 million. Over the first three months of this year, GM's U.S. sales are down 7 percent from a year ago.
U.S. sales by major domestic automakers have slid for six consecutive months, prompting them to slow production to trim bloated inventories. GM cut production by 21 percent in the first quarter, with plans to pare output by 17 percent from this month through June.
"Our first-quarter performance was better than expected, considering significantly reduced production volumes in North America," GM chairman Jack Smith said. "While the economic and competitive environment is challenging, we remain focused on our key customer and business priorities."
Other GM units around the world posted mixed results.
GM's European business lost $86 million, down from a $221 million gain last year. GM's Latin America/Africa/Mid-East unit earned $6 million, $5 million more than a year ago. And GM's Asia-Pacific division lost $20 million, down from a $7 million gain last year.
GM's finance arm, GMAC, saw its earnings rise, from $397 million to $431 million. The automaker said GMAC's performance and lower costs in the North American automotive business only partly offset the effect of lower vehicle sales and intense pricing pressures on this continent and in Europe.
The Hughes electronics unit posted a first-quarter net loss of $96 million, compared to $77 million in red ink a year ago. Hughes, which blamed its latest loss on value depreciation on its satellite fleet, warned Tuesday that an uncertain economy will lead to the company taking a "cautious approach" toward expanding in the coming months.
GM said that despite "considerable" econmic uncertainties, the company said the 95 cents a share expected by analysts in the second quarter is consistent with its own expectations.
Ford Motor Co., the world's second-largest automaker, reports its first-quarter earnings Thursday.
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