By Shawn Langlois
SAN FRANCISCO (Dow Jones) -- General Motors Corp. no longer
needs to convince Wall Street or Washington that it's running on
fumes. With its stock price bouncing off Great Depression lows,
losses mounting and sales drying up at an historic rate, nobody
doubts that.
Still, GM's quarterly report slated for early Thursday will
surely hammer home the point anyway, though the expected flood of
red ink is almost irrelevant in the bigger picture.
"Anyone boneheaded enough to focus on the (earnings) first and
foremost needs to avoid operating heavy machinery," CreditSights
analyst Glenn Reynolds quipped.
"There are just so many major issues to focus on even beyond the
dominant issues of Washington talks, the bondholder negotiations,
and the UAW talks that they will inevitably refuse to discuss
unless they are done," he added.
Reynolds said that Wall Street will primarily be fixated on the
immediate rate of cash bleed in the first quarter along with the
details of what happened in the fourth-quarter.
As for the bottom line, the fallen Detroit giant (GM) is
expected to hand in a loss, on average, of about $4 billion,
according to analysts surveyed by FactSet Research. On a per-share
basis, the overall loss is expected to come in at whopping
$6.91.
GM reported a third-quarter loss of $2.54 billion or $4.45 a
share and said it burned through $6.9 billion in cash during the
three-month period.
Revenue is projected to drop by 24% drop to $35.5 billion as a
result of the worst industry sales results in decades. GM reported
a 48.9% drop in January U.S. light vehicle sales to 128,198 cars
and trucks from 250,926 a year earlier.
The prevailing story, however, will remain what's next for GM
after the company submitted its viability plan to the U.S. Treasury
last week in which it asked for up to $30 billion in low cost
loans. GM and Chrysler still need to secure concessions from union
workers, creditors and other stockholders by the end of next month
to maintain the government's backing.
Rival Ford Motor Co. (F) set a framework for talks between GM,
Chrysler and the United Auto Workers last week when the company
reached a deal allowing it to use equity to fund up to 50% of its
payments to the union's health-care trust instead of cash.
Ford, which has declined a taxpayer handout so far, already set
the stage for a dismal earnings season for the industry. The
Dearborn, Mich.-based company posted a loss earlier this month of
$5.9 billion, putting the exclamation point on its worst annual
loss ever of $14.6 billion.
GM shares hit a 74-year low of $1.52 last week but rebounded on
Tuesday to close up more than 25% at $2.22. The stock tacked on
another 10% in early trades Wednesday. Still, the Dow component has
given up 90% of its value in the past year.