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Old 03-01-2007, 12:23 PM   #1
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Default GM earnings delays spark sell-off

GM earnings delays spark sell-off

GM misses deadline to file improved fourth quarter result; major supplier Delphi also misses deadline for new UAW deal.

NEW YORK ( -- Shares of General Motors fell sharply as it announced it would missed a deadline to report quarterly results and its primary supplier missed a self-imposed deadline to reach a new labor deal with its unions.

Shares of Dow component GM (Charts) were off as much as 3 percent immediately after the announcement of the problem, although it rebounded to be down about 1 percent in late morning trading. The company has also signaled that it will be reporting lower than hoped for auto sales later in the day Thursday.

In a filing with the Securities and Exchange Commission, GM said that it would not report the 10-K, which details its fourth-quarter results, by the March 1 SEC deadline, and it said it would file for the allowed two-week extension for that report. It said it does expect to file by the new March 16 deadline.

The delay comes as GM weighs accounting issues for some past deferred tax liabilities, derivative instrument accounting and hedging activities in past years that will likely lead to restatements. It also is waiting for final accounting of results of the GMAC finance unit. GM sold a 51 percent stake in the finance arm to a private equity group as of Nov. 30.

Analysts surveyed by earnings tracker First Call forecast that GM earned $1.19 a share in the fourth quarter, excluding special items, compared to a loss of $2.09 a share on that basis a year earlier.

"I think they'll come out clean with a large profit. But unless there was a large problem that couldn't be resolved, they wouldn't have delayed it, so it is a concern," said analyst David Healy of Burnham Securities. "My guess is they won't receive quite as much cash on closing (for GMAC) because of the conditions in the real estate market. But I don't think it's a huge thing."

Separately, bankrupt auto parts maker Delphi (Charts), a former unit of GM, announced late Wednesday that it had not been able to reach an agreement with GM and its unions by the end of February, as it had planned. That is serious because a group of private equity firms who have committed to $3.4 billion in financing to the parts company have the right to pull out of the deal if there was no agreement by Feb. 28.

But Delphi announced that it's investors had entered into an agreement with the investor group that extends their right to pull out of the investment deal to 14 days after giving notice.
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