Full report can be found @ http://www.newswire.ca/en/releases/a.../16/c3251.html

from www.cnnfn.com

 

Man...thats just insane. I was just watching the afterhours stock price and it went down 50 cents a share in the last 20 mins.

 

Hey, what's a couple billion in the grand scheme of things???

I know they stated a while back that this was going to happen, but sure seems like when it rains, it pours.

 

Corporations often like to pile all the bad news into one quarter so it doesn't keep affecting them every time they have to report earnings. Kinda like wiping the slate clean. This will make it easier for GM to make 2006 look like a better year.

 

So what exactly does this mean?

 

Basically, GM's rolling all the bad financial news they can into last year's reporting period (2005) and avoiding putting it into this year's.

It's going to make GM's earnings this year look better, and may even give them a tax break on it's 2005 earnings.

GM stocks are in a tizzy because because stocks react to any bad news. Kind of like financial heard mentality.

Very little "real" affect on GM, so don't panic.

 

Yep - looking at GM's press release, they made it very clear that at least $300M of this is pull-ahead for restructuring costs "after the current labor contract expires" (that's 2007). Hey, if GMAC and its $2B/year in profit goes away, it'll be better to pile on losses to an already crappy year than to stretch the losses out another year or so until bankruptcy... oops, I mean, "better times".

I disagree. First, the company will be restating all its results from 2000-present. That's huge, and it'll be interesting to see if the SEC decides to invoke Sarbanes-Oxley (specifically, its requirements that all financial statements are "certified" by executive and financial officers). There is already a ongoing SEC investigation, so maybe this will actually close out that issue. Second, what does this due to the oft-stated claim that GM has "plenty of cash"? I'm no accounting genius, but I can say that if I say that I've got $20, and then I lose $10.60, I've got less than I started with. Multiply those numbers by, say, one billion, and we've got GM (well, that's if we believe the $20B number, and ignore the fact that it's made up largely of a retiree health-care trust fund and receivables from dealerships). Third, the most significant chunk of this additional $2B comes from more money being thrown at the Delphi pension liabilities. GM keeps saying that its liability is at the "low end of the range", and then keeps jacking up the number representing that low end. Only $6.4B or so to go until GM gets to the $12B "upper end".

It's stunning that a company which is run by beancounters would have so many problems figuring out how much its losing. Wall Street will probably crucify the company, and rightly so.