Finally after all the delays, General Motors Corp. has announced that it is ready to release its fourth quarter earnings on Wednesday. It should be noted that the automaker was suppose to report its fourth quarter results last January 30 but since it has to restate its earlier results it has requested for an extension.
The world's biggest automaker and manufacturer of the popular is restating some of its earlier financial reports to fix accounting errors due to deferred tax liabilities, hedging, and other items covering period from 2002 through 2006's third quarter. The Detroit-based GM has already restated some of their results back to 2000.
GM had earlier stated that it would post its fourth quarter profit with record revenue, without stating the figures. GM has succeeded in cutting costs after it has convinced 34,300 US union workers to retire early since it plans to shut down 12 of its North American facilities by 2009.
Efraim Levy, a New York-based equity analyst at Standard & Poor's with a "hold" rating on GM shares said that the fourth quarter results will show just "how much savings are getting to the bottom line. You may want to see steady progress."
According to Autodata Corp., GM has been able to increase its fourth quarter US sales by 1.1 percent a year earlier to 925,460 cars and light trucks. However, the full-year sales decline by 8.7 percent to 4.07 million. To recover from its losses, Chief Executive Officer Rick Wagoner is increasing its sales in emerging markets such as China, Indian, and Russia.
GM has announced that it will release its quarterly earnings on March 14 at exactly 7 am Eastern time, followed by a 9:30 am conference call for reporters and analysts.
Before GM makes its official announcement, 12 analysts have already released their own predictions which Bloomberg has compiled. According to the forecasts of the 12 analysts GM profit per share excluding some cost would reach $1.22. For 2005, GM has reported for its final quarter a net loss of $6.66 billion or $11.79 a share.
GM for this year has gained 2 percent or 33 cents per share reaching $31.32 at 4:21 pm in the New York Stock Exchange composite trading. Since the end of 2004, GM has been reporting net losses in every quarter so it is expected that for the first three months of last year the automaker will be reporting a net loss. Before restating its earlier financial results the automaker has reported a loss amounting to $3.03 billion for the first three quarters of last year and a $10.6 billion loss for the year 2005.
The company's fourth quarter results will include two months of earnings of its financial arm, the General Motors Acceptance Corp. which GM has sold 51% of its shares in a transaction that was completed last Nov. 30. It should be noted that GM has requested the Securities and Exchange Commission last March 2 to extend their deadline for its 10-K annual report for 2006 since it's not yet finished with its restatement.
According to some analysts the recent delay may mean that GM have to pay some proceeds from the $14.4 billion sales of the GMAC stake to a group led by Cerberus Capital Management LP due to bad loans. Brian Johnson, a Lehman Brother analyst have written last Feb. 16 that GM may have spent as much as $950 million to cover the difference between the original value of GMAC and the value after bad loan losses. That is also the foreseen reason why the spokeswoman of the automaker and GMAC refused to comment when GM announced last March 1 that it would request for an extension.
Pete Hastings, a fixed income analyst at Morgan Keegan & Co. in Memphis, Tennessee said, "Maybe we'll see the adjustment for subprime loans at GMAC." Hasting also added that he is looking forward to examining the closing figures of GM's balance sheet for both the quarter and year-end.
