The automaker General Motors said Thursday that its cash reserves were down to $14 billion at the end of 2008, a year when the industry’s worst sales slump in decades nearly forced the company into bankruptcy before the federal government gave it a lifeline.
G.M. lost $30.9 billion, or $53.32 a share, in 2008 and spent $19.2 billion of its cash reserves.
For the fourth quarter, it lost $9.6 billion, or $15.71 a share, as its global sales fell 26 percent. It spent $6.2 billion of its reserves in the fourth quarter alone. The company has said in the past that it needed a minimum of $11 billion to $14 billion in reserves.
In 2007, the company lost $43.3 billion, a record, mostly the result of a noncash accounting charge; it adjusted the figure higher by $4.6 billion on Thursday.
The losses, though, are unlikely to shake investors, who have already realized the automaker’s perilous state. G.M., which has borrowed $13.4 billion from the government since December, said last week that it might need as much as $30 billion to complete the restructuring plan that it has submitted to the Treasury Department.
The $14 billion that G.M. had on hand in December includes the $4 billion of government money that it had received at that time, meaning that the company would have been below its minimum level without the cash. An additional $9.6 billion was disbursed to G.M. in January and February.
Executives have repeatedly insisted that the company’s best option is to restructure outside of bankruptcy. G.M. estimated last week that it would need nearly $100 billion to finance a bankruptcy reorganization.
G.M.’s reported 2008 revenue of $149 billion was 17 percent lower than the previous year’s revenue of $180 billion. Global sales fell 11 percent in 2008, its centennial year, making Toyota of Japan the world’s largest automaker and ending G.M.’s 77-year reign at the industry’s pinnacle.
Excluding one-time charges, G.M. lost $16.8 billion last year, or $29 a share. Its fourth-quarter operating loss was $5.9 billion, or $9.65 a share, worse than the per-share loss of $7.40 that analysts were expecting, on average.
Its revenue in the fourth quarter fell 34 percent to $30.8 billion.
G.M.’s global automotive operations lost $10.4 billion last year, compared to a $553 million profit in 2007.
It lost $2.1 billion in the quarter in North America, the most troubled market, compared to $1.1 billion in the final months of 2007. It reported losses in all of its other geographical regions, as well,
GMAC Financial Services, the automaker’s lending arm, posted a fourth-quarter profit of $7.5 billion, though it would have lost $4 billion without a bond exchange in December.
Shares of G.M. have lost 89 percent of their value in the last year, touching a 74-year low of $1.52 last week before rebounding.
(Source: NY Times)
Join the official YWN WhatsApp status
8 Responses
It is good that GM is a corporation (juristic person) rather than a flesh and blood human (natural person), since otherwise the Rabbanim would have us protesting over removal of life support (as in, it’s dead, over, beyond hope, time to call the “hevrah kadisha” of the corporate world, otherwise known as the bankruptcy court).
Let us bury GM.
Business is business, you are losers. Face the facts and start another company with your assets.
Its not a matter of burial. They should go Chap 11 and restructure that way.
A problem they have is that the govt wants them to build cars that people WONT buy. Its called too much govt involvment in our lives. People dont want the little matchbox cars.
#3-actually, the government was encouraging them to build smaller cars, which it turned out, is what people wanted to buy — the “big Three” thought they could shape the market to prefer big and more expensive cars, and the foreign companies, being a bit less arrogant, made a killing by selling the small cars that were what people wanted.
Given a corporate culture, shared by the union, that ignored profitability (management and union basically looted the company), a chapter 7 would not be a bad idea since that way you end up with brand new owners whose first concern would be profitability rather than maximizing their own paychecks (at the expense of shareholders and customers)
Actually, it is the unions that want them to build cars regardless of whether or not people want them.
4,
You are SOOOOOOOOO incorrect!!
There is a reason the small cars don’t sell & there is a reason the hybrids don’t sell well & there is a reason the pick up trucks as well as larger vehicles do better than the smaller cars.
The reasons are all the same…. PEOPLE WANT BIGGER VEHICLES. Which line if vehicles are the biggest sellers?? NOT the smaller ones. Its the larger vehicles and pick ups.
Check your facts before you spew left wing kool aid.
I like Jap cars much more since they are quality, by the way Ford Corp. funds the anti-Semitic Ford Foundation
Mark,
You are living in 2006. The big three collapse occured when tastes changed, and they were slow to adapt (similar to the legendary Edsel fiasco), whereas the foreign car companies played the market (perhaps because as foreigners they did market research, rather than arrogantly deciding they “knew” the market). That, plus the higher salaries and wages (on all levels, some say as much as 100% higher for workers, 1000% higher for managers), brought GM’s stock down its virtual non-existence.