Corpturn Around
- Submitted by: mafferikje
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- Date Submitted: 03/17/2011 03:45 PM
- Pages: 4
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What is my position for or against the prospect of eventual success of turning around Detroit’s Big Three General Motors?
After suffering through years of enormous losses and one of the biggest bankruptcies in U.S. history, General Motors Co. (GM) Thursday posted its first annual profit since 2004.
The Detroit automaker said it earned $4.7 billion in 2010, compared with a $21 billion loss posted by the current GM and its pre-bankruptcy predecessor in 2009.
"Last year was one of foundation building," Chairman and Chief Executive Officer Dan Akerson said in a statement. "Particularly pleasing was that we demonstrated GM's ability to achieve sustainable profitability near the bottom of the U.S. industry cycle, with four consecutive profitable quarters."
The results marked the end of a $90 billion losing streak that started in 2005, stretched through 2008, and then climaxed with the American automobile icon tumbling into bankruptcy in 2009.
Net income for the fourth quarter was 31 cents a share, Detroit-based GM said. Profits were 52 cents a share, excluding a charge for purchases of preferred shares from the U.S. Treasury Department.
The results topped the 44 cents average estimate of analysts surveyed by Bloomberg News. Revenue rose to $36.9 billion, also exceeding the $34.6 billion average estimate. The company reported $135.6 billion in sales for the entire year.
The turnaround comes after the bankruptcy and a massive bailout by the federal government, which loaned the company $50 billion in exchange for a 61% ownership stake.
In the restructuring that followed, GM slashed debt, cut payrolls, closed outdated factories, shed product lines and reduced health benefits and other expenses by renegotiating union contracts. The changes allowed GM to trim the cost of building a vehicle by several thousand dollars.
But U.S. taxpayers are still the automaker's largest shareholder, holding roughly 500 million shares for a 27% stake of the company. It...
After suffering through years of enormous losses and one of the biggest bankruptcies in U.S. history, General Motors Co. (GM) Thursday posted its first annual profit since 2004.
The Detroit automaker said it earned $4.7 billion in 2010, compared with a $21 billion loss posted by the current GM and its pre-bankruptcy predecessor in 2009.
"Last year was one of foundation building," Chairman and Chief Executive Officer Dan Akerson said in a statement. "Particularly pleasing was that we demonstrated GM's ability to achieve sustainable profitability near the bottom of the U.S. industry cycle, with four consecutive profitable quarters."
The results marked the end of a $90 billion losing streak that started in 2005, stretched through 2008, and then climaxed with the American automobile icon tumbling into bankruptcy in 2009.
Net income for the fourth quarter was 31 cents a share, Detroit-based GM said. Profits were 52 cents a share, excluding a charge for purchases of preferred shares from the U.S. Treasury Department.
The results topped the 44 cents average estimate of analysts surveyed by Bloomberg News. Revenue rose to $36.9 billion, also exceeding the $34.6 billion average estimate. The company reported $135.6 billion in sales for the entire year.
The turnaround comes after the bankruptcy and a massive bailout by the federal government, which loaned the company $50 billion in exchange for a 61% ownership stake.
In the restructuring that followed, GM slashed debt, cut payrolls, closed outdated factories, shed product lines and reduced health benefits and other expenses by renegotiating union contracts. The changes allowed GM to trim the cost of building a vehicle by several thousand dollars.
But U.S. taxpayers are still the automaker's largest shareholder, holding roughly 500 million shares for a 27% stake of the company. It...