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General Motors Predicts First Profitable Year Since 2004

November 18, 2010 by  

General Motors predicts first profitable year since 2004The largest American automaker has predicted that it will enjoy its first profitable year since 2004.

According to the Christian Science Monitor, General Motors (GM) announced on Nov. 9 that it recorded a $2 billion profit for the third quarter, which is up 50 percent from the company's second quarter figures. Ford posted a $1.7 billion profit in the third quarter, while Chrysler reported a net loss of $84 million.

GM, which is set to begin trading its stock publicly on Nov. 18, has accrued $4.2 billion in year-to-date earnings after taxes and interest. A year after filing for bankruptcy, GM's third quarter results are expected to help the company pay back the Federal government, which approved $17.4 billion in emergency bailout funds for automakers in 2008.

In former President George W. Bush's memoirs Decision Points, he defends his decision to sign the bailout by saying he "had to safeguard American workers and families."

"I told Barack Obama that I wouldn't let the automakers fail," wrote Bush, quoted by The Detroit News. "I won't dump this mess on him."

Bush blames the auto industry's near collapse on decades of poor management, which was slow to recognize changes in the market. The former commander-in-chief said that lackluster leadership led GM, Ford and Chrysler to be "outcompeted" by foreign manufacturers.

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  • Dan az

    Was that profit from the mexico plant or the canadian plant that we the tax payers payed for.Dont get me wrong Im a chevy fan but I would rather buy an american car that was built here in the states like honda toyota ect.At least I know that my monies are going to the people that work here and pay those taxes.I guess I wouldnt be so pissed if it were not for the promise that the inlightened on made with the chineese,that he was going to sell GM to them come Nov.Maybe its just me but I only buy things that are made in the USA.

    • http://none Mike

      Dan, Me too but thats getting hard to find now. I wonder if this profit they are showing comes from the stock market offerings? If so we know the fed just dumped tons of money on Goldman Sacs and this could just be another prop up move to say look see the bailouts worked. Oh dam that was cynical you people are starting to rub off on me lol jk Mike L.

      • Dan az

        Mike
        That’s probably true,close to a trillion was dumped and now the chineese are going to be rewarded for their money being devalued. I wounder what they are going to do with the HumVee contract from the military?And by the way It does rub off on you here but thats a good thing!

        • http://none Mike

          I know Dan, I put that last line in there because before I came here I was wondering if I might be the only one that tried to think my way through something and not just react to it. Its good to hold a conversation with people and try to open a few eyes. I have had mine opend a few times here now especially around the 9/11 incident. Mike L.

    • kate gray

      It is so hard to find things that are made in America any more. The regulations and the Union drove companies out of this country. Many more will leave as long as Obama is in office. Our new Congress needs to say that America will not allow unions or Congress to put outrageous demands on companies who want to come back..Put a 25% import tax on all goods coming back in from American companies doing business outside of the United States. Somewhere we will reach a happy medium.

  • http://www.newsandopinions.net Bill Stanley

    Of course Government Motors is profitable … taking taxpayers’ money … wiping out their debt by filing bankruptcy and screwing bondholders and stockholders. I hope Ford kicks their butt. http://www.newsandopinions.net

    • Norm

      I play the market a bit and am well aware of the good and bad of investing. Those stock and bond holders who lost money on GM did so at their own risk.
      Bush and Obama did the right thing in saving GM (oddly Bush is claiming credit) and when the borrowed money gets back to the treasury, with interest, the American people will not have suffered any losses.
      I wonder if Rush will admit his “error” in predicting and hoping for the failure of GM and calling the bailout a commie plot.

      • coal miner

        Norm,

        The two presidents did the right thing.That lard ass fat Rush Limpballs will still say its a commie plot.I hope we got enough crow to go around.I know some of these bloggers must be hungry.Here is the report.

        How General motors came back from the brink

        The largest share offering in US history begins today and marks the rebirth of the car-making giant

        By Stephen Foley

        Thursday, 18 November 2010

        Cars in production at the General Motors plant in Lansing, Michigan

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        General Motors, the giant car maker, races back on to the US stock market this morning, after the biggest share offering in American history, and investors were falling over themselves to get a piece of the company.

        Just a day after saying it would raise the price of its shares, GM yesterday decided also to increase the number of shares being sold, resulting in billions of dollars extra for its current owners, the US and Canadian governments and the unions representing thousands of retired workers. It is on course to raise $23.1bn, giving the company a market value around $50bn.

        Last night, as it set the price for ordinary shares at $33 apiece, the top of its increased range, analysts were already weighing in on the long-term prospects for the company, which since last year has called itself “New GM”. Its pit stop in bankruptcy allowed it to shed thousands of workers, billions of dollars in pension and healthcare liabilities, underperforming factories, unwanted dealerships and four of its eight brands, including Pontiac, Saturn and the notorious gas-guzzler Hummer.

        Some $6bn of the IPO proceeds will go to funding obligations to retired workers, helping to resolve a structural problem that had hobbled GM for a generation: it is supporting five times as many retirees as it has employees.

        “The old joke was the GM was the world’s largest [health management organisation], which just happened to also sell cars,” says David Whiston, a car industry analyst at Morningstar. “Healthcare costs in the US had just gotten out of control. The company has $5bn in hourly worker costs annually now, compared to $16bn in 2005… The company has posted well over $4bn in net income so far this year. This is a very, very different company.”

        After years where it lost around $1,000 on every car it made in North America, GM now turns a profit of around $3,000, and with car sales in the US recovering from the effects of the recession, analysts are forecasting its margins can expand. As importantly, it has had some sales successes, with popular models such as the Chevrolet Traverse mini-SUV and the Buick Lacrosse, a luxury sedan, and has generated some buzz around its forthcoming Chevy Volt, an electric car.

        Mr Whiston said he expected the shares to rise towards a fair value of $44. “Old GM” bonds which are still trading, and which will eventually convert into New GM shares, suggest that the stock could be worth in the high-$30s.

        Both the Bush and Obama administrations feared that the collapse of GM and its cross-town rival Chrysler would have effects far beyond the companies themselves, as suppliers folded and hundreds of thousands, or possibly millions, of jobs were put at risk. As a result, Wall Street bailout money was redirected to the car industry, and the process of remaking GM began in December 2008.

        The US taxpayer has held a 61 per cent stake in GM as a result of the restructuring. To break even on its investment, the Treasury must get an average price of $44 per share, but it decided that it would rather sell more shares now, at a price which risks an ultimate loss to taxpayers, instead of waiting. Its stake is being cut to about 33 per cent, against the earlier planned 43 per cent. GM has been eager to shake off the moniker “Government Motors”, while the Treasury is keen to extricate itself from major interventions in the private sector.

        GM sold 478 million common shares at $33 each, raising $15.77bn, as well as $4.35bn in preferred shares, also more than initially planned. Including an overallotment option, which will be settled over the next few days, GM looks set to raise $23.1bn – the biggest initial public offering ever.

        What it means for GM’s rivals

        The ease with which General Motors has found buyers for its initial public offering bodes well for rival Chrysler’s own planned return to the stock market, Sergio Marchionne, Chrysler chief executive says.

        Speaking in Los Angeles ahead of the city’s auto show, Mr Marchionne said Chrysler would not bring forward its IPO plans, pencilled in for the second half of 2011, but would study how GM shares perform. “It will give us the logistics of what this market is looking for, as far as pricing expectations,” he said. “This will give us a great, great precursor for the Chrysler IPO. I’m delighted, it couldn’t have gone better.”

        And the executive launched a full-throated defence of the auto bailouts, saying Chrysler had already added 12,000 jobs since bankruptcy and that had an even bigger effect on the economy. “I don’t care what multiplier you use, one-to-four, one-to-seven, including the pizza guy.

        “If you go far enough down the chain, I think the multiplier effect is huge. It just reinforces the fact that President Barack Obama did the right the right

        This is a company that I worked for for 38 years. GM had already taken steps to downsize and get leaner when the economy nosedived. It was reported in Dec.2008 that GM needed 14 billion dollars on hand just to operate. That’s how big it still was before the bankruptcy. This company used to have hundred’s of thousands of workers. To suggest that GM could have gone bankrupt and still operate by selling off pieces of this company is something that only an outsider would still suggest. Even an attempt to unload Saturn and the Hummer failed. An IPO like this one would never had been possible without the careful planning to every detail. The plant that I worked at built transmissions but had to close it’s doors. It once built bombers used during World War 2 but it’s time was up. It seems more practical to me to save the industry that we still have left and keep everybody paying taxes instead of drawing unemployment. The good paying jobs are drying up and it seems to me that it would be easier to hold on to them than trying to create new ones. It’s sad that more people are upset that GM may pay back the taxpayers and would rather see them fail. I would think it’s more favorable for the banks and auto companies to be successful and pay this money back if we are ever going to restore this economy. Are we still rooting for America? If we don’t come together than there may not be very much left to fight over. This is something that President Bush and President Obama will be praised for long after they are gone. Many would not have stuck their necks out to save the auto industry but would have let it disappear like the other industries that are no longer around. I think they hate government so much because they don’t have the fortitude and skills to govern.

        • http://marcum@wildblue.net coal miner

          hi

      • http://marcum@wildblue.net coal miner

        i

  • Stan Rupiper

    Stan Sez, Can you imagine getting a CadillaC MADE IN CHINA?

    • JimH

      Cateracts and Rincolns.

  • Dennis

    Man i tell ya what, i love an old 1966 thru 1972 chevelle, basicly any camaro, 1966-67 and the new corvettes and some of the old cadillacs, But the new GM Government Motors along with their new electric car can kiss my azz.

    • Claire

      Electric cars? Nope, never. There are several here in town and I would not want to be caught in one of them on an interstate, let alone in town. They look absolutely pathetic, barely enough room for 2 people. They are a pain in the kazoo.

  • http://com i41

    Yes, Government Motors looks great, they just tranfered the debt from one taxpayers credit card to another Democrat Stimulas spend all you want ponzi card. With everyone out of work, the BS today saying people are buying shares, must be Soros or the overpaid taxpayer supported union slugs. Just wait for the new name “Chivy Commie Coupe” a straw dog putt putt.

  • Budd

    Are you ready to invest in a coprpration paartly owned (and probably controlled by) a government determined to take your wealth (savings, retirement, health …) and distribute it to the havenots of the world and considers the poorest of American citizens to be among the world’s richest citizens. (Better to reduce unemployment insurance / welfare to less than illegal imigrants can earn, thereby enticing them to WORK or starve.) Many of Eric’s goals are good, but more are probably destrucetive to the American way of republic capitalism. The one principle he fails to mention, congress is supposed to guide the President and his administration; the President is an administrative employee of the people, not the other way around.

    Congress should be reduced to two or three months session per year to provide oversight, not to make new laws, government regulator agencies, etc., not provided by the US Constitution. Regulation should be provided by the JUSTICE courts on a case by case situation (laws should be returned to guidence, not absoulte because of “prior court rulings.” No law can be written that will cover all variables, especially mitigating circumstances; thus every case should be considered unique and judged by the JUSTICE of it’s

    • Dennis

      I have been a chevy man all my life, or should i say was a chevy man, what a bunch of BS liars.
      Go (offensive word removed) yourself GM.

  • ONTIME

    Improperly Government Motors has not finnished paying off it’s debt and I for one am not in favor of letting that massive loan slide off into oblivion, which is what some libs in the congress are advocating.

    I realy do hope they have a profit but all the numbers do not add up and again I suspect book cooking has taken place as is the way of this administration when it cannot face up to the truth. So now it is time to collect on the loan and if you feel brave and want more risk, the buy into the IPO offering and hang on for the ride of your life. Up or Down, who knows.

  • jopa

    Budd;I’m sure there are a lot of people ready to invest in America and that is what GM stands for.Not only that we are the government(American citizens)but I don’t know what country you belong to so your opinion may differ.The GM bailout is turning out to be another American success story that infuriates the conservatives and the Taliban.And the rest of the Anti-American scum, and you know who you are.GMs new Camaro gotta love it.

    • coal miner

      jopa,

      Well said!

    • JimH

      jopa, The new Camaro, looks good. The rest of your post is drivel. The bailout is NOT a success story and what infuriates conservatives is, the bailout happened and mindless drones like you believe it was a success because the DNC told you to think it was. I don’t know what Taliban or anti- American scums think about the bailout. Maybe being one of the anti- American scums( I know who you are), you could tell us.

      • Claire

        I love my new Chevy Impala. I have been a “Chevy” person my entire life and will continue to be. The new Camaro looks real good, the side view body style looks a bit like my ’69 Camaro. As far as the bailout goes, I hope they do succeed. After all, didn’t the taxpayers money bail them out? Since some of my taxpaying dollars were used, I don’t want GM to fail.

        • Claire

          Another thing that bothered me was when Anheuser-Busch was sold to a Belgian company. An American ICON sold to a foreign company.

        • JimH

          Hi Claire, The new Camaro does look good, but I would rather have a mint condition 69. A friend had one when we were in high school, it would be fun to take one out again.

          • Claire

            JimH– I have a ’69 Camaro Rally Sport with hideaway headlights. Charcoal gray with a black vinyl top. Bought it new for $3600. It is a 350 4-barrel and it will haul. It has been a good car. It purrs like a kitten. It has about 80,000 miles on it now. It was hard to keep our hands off it! It is in good condition inside and out. We only drive it in the summertime. It is fun–when I drive it, there are some people that will pull alongside and want to give it “a go.” Geez, at my age it still gives me a thrill.

          • Claire

            JimH–I neglected to say the original color was Cortez Silver, my husband had it repainted a month or so ago–now it is charcoal gray metallic. I liked the Cortez Silver better.

          • JimH

            Hi Claire, It sounds like a fun car. Enjoy it.

        • Dennis

          Dam,
          Claire you are right, i also do love a good chevy, i just have a hard time with their new owner.

          • Claire

            Dennis–The way I look at it is this–the owners are us–correct? Good old taxpaying dollars. I just keep thinking that if GM gets out of the hole, pays back the money, then the government is supposed to back out, right? This is what I am led to believe.

          • libertytrain
          • Claire

            libertytrain—I read your link that you posted. I should have known. Nothing is what it seems, and my bubble has burst. I was hoping…but since China owns us now, I shouldn’t be surprised. What a sorry state of affairs.

          • libertytrain

            Claire – you’re right – nothing is as it seems -

  • chuckb

    jopa, day dreaming as always. america is ready to invest in gm? electric cars, are you kidding this is the biggest boondoogle of all times. al gore must be wetting his pants, 20,000 plus for a sardine can that can’t go more than ninety miles before a four hour charge, that’s almost hilarious. can’t you see al and nancy driving around in one lol lol.
    gm is going to end up just like barry, a failure and you can thank barry and the unions for that one.

  • http://com i41

    jopa, if you think Government Motors is such a hit, why don’t the onumnutts and dembocrat Congressional rid around in the matchbox batery cars, sinceall the NMCDUP morons buy into to the green BS. The f–king union idoits will be back at the taxpayer funding trough in no more than 5 years. You definately are a oidoit lap pooch, waiting to for a bone from Soros.

  • chuckb

    141
    we are watching the juggling act of the century with gm stock. gm should have bitten the dust just like anyone else that couldn’t pay their bills. barry and company will go to any means to make this company look profitable, you note they are bailing out the unions retirement fund during this charade, they are sucking in all the sheep
    hoping some miracle will come along and save them, it won’t be the sewing machine on wheels driven by battery power. that will probably be the straw that breaks their back

  • ARIZONA GUY

    I AM A FREEMARKET GUY AND AM A FULL BRED CONSERVATIVE. HOWEVER I STILL FEEL THE SAVING OF GM WAS THE RIGHT THING TO DO. TO MY KNOWLEDGE I HAVE NEVER READ WHAT SOME OF THE IMPLICATIONS OF A GM FAILURE WOULD BE. WE ALREADY HAVE A CRISIS IN HOME FORECLOSURES ACROSS THE COUNTRY. ONE CAN ONLY IMAGINE THE HUGE INCREASE IN FORECLOSURE IF GM WORKERS WERE LAID OFF. IT WOULD HAVE DEVASTATED HOME VALUES EVEN MORE. THE PARTS SUPPLIERS OF GM WOULD ALSO HAVE HAD TO LAY OFF EMPLOYEES, A DOMINOE EFFECT WOULD FOLLOW. THE MANY DEALERSHIPS ACROSS THE COUNTRY WOULD ALSO BE HIT. THE AMERICAN BIG THREE AUTO MAKERS IN THE PAST MADE BAD CONCESSIONS TO THE UNION BUT UNFORTUNATELY THEY DID THIS TO AVERT LONG STRIKES. NOW FAST FORWARD TO THE CONSTRUCION OF AUTO MANUFACTURING PLANTS BY FOREIGN CAR COMPANIES. THEY FIRST GOT TERIFIC DEALS ON LAND AND TAX CONSIDERATIONS TO LURE THEM TO THE SOUTHERN STATES. THEY ALSO HAD THE FINANCIAL ADVANTAGE OF NOT HAVING TO PAY PENSIONS TO RETIRED WORKERS. EVERYTHING WAS IN THEIR FAVOR. ALSO JUST REMEMBER WHERE THE PROFITS FROM THEIR OPERATIONS HAVE GONE—– BACK TO JAPAN, GERMANY AND SOUTH KOREA. THIS IS CAPITAL THAT ORDINARILY WOULD BE RECYCLED BACK INTO OUR ECONOMY.

  • http://marcum@wildblue.net coal miner

    lets see:

  • http://marcum@wildblue.net coal miner

    turkey

  • http://marcum@wildblue.net coal miner

    we

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