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Old 11-07-2007, 08:18 AM   #1
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Default GM shares drop in premarket; Q3 loss totals $39B on huge charge

GM shares drop in premarket; Q3 loss totals $39B on huge charge


NEW YORK, Nov. 7, 2007 (Thomson Financial delivered by Newstex) -- General Motors Corp. (NYSE:GM) Wednesday reported a third-quarter loss of $39 billion, or $68.85 a share, reflecting a massive charge related to a valuation allowance against its deferred tax assets.

The company disclosed plans to record the $38.6 billion charge late Tuesday. The latest results also include a gain of $3.5 billion from the sale of its Allison Transmission business, a charge of $1.6 billion related to pension service costs, and a two separate $400 million charges stemming from restructuring actions and an adjustment to its Delphi reserve.

Excluding items, the Dow component reported an adjusted loss of $1.6 billion, or $2.80 a share. In the same period a year earlier, on an adjusted basis, the company earned $497 million, or 88 cents a share.

It attributed the year-over-year decline in results to a significant drop in net income from the GMAC financing business and higher corporate expenses.

Total sales and revenue reached $43.83 billion in the quarter.

The mean estimate of analysts polled by Thomson Financial was for a loss of 25 cents a share in the September period with revenue of $40.29 billion.

The company said its loss related to its 49% equity interest in GMAC and accrued preferred dividends was $757 million in the latest quarter.

General Motors' North America posted for a loss from continuing operations of $247 million in the September period.

'We continue to implement the key elements of our North America turnaround strategy, and these initiatives are driving steady improvement in our financial results, despite challenging North America market conditions,' said Rick Wagoner, the company's chairman and CEO.

Wagoner continued: 'In addition, we are very encouraged by our performance in emerging markets. Our record third quarter global sales are strong evidence that our commitment to great cars and trucks is being embraced by consumers around the globe.'

The stock was off almost 9% in premarket action to $33.
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Old 11-07-2007, 08:49 AM   #2
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What exactly is the 38 billion charge they made?
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Old 11-07-2007, 08:56 AM   #3
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Originally Posted by SlideWRX View Post
What exactly is the 38 billion charge they made?
probably to pay the CEO's bonus
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Old 11-07-2007, 09:46 AM   #4
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From yahoo:
GM attributed the third-quarter loss to a $38.6 billion noncash charge largely related to establishing a valuation allowance against accumulated deferred tax credits in the U.S., Canada and Germany, as well as mortgage losses at GM's former financial arm, GMAC Financial Services.

But accounting rules require that companies expecting to keep losing money cannot keep carrying deferred tax credits indefinitely and must write down their value.
Sounds like accounting bs to me, which seems the norm these days. A loss is a loss. My favorite quote:

"I think you'd have to have a Ph.D. in accounting to understand it," Wagoner said during an interview on "The Paul W. Smith Show" on WJR-AM.

"It doesn't have any impact at all," he said.
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