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GM to Report 'Solid' Q1 Operating Results, Whitacre Memo Says

April 13, 2010
3 min to read


DETROIT - General Motors Co. expects to report "solid" operating results for the first quarter, which will show progress toward its goal of returning to profitability in 2010, CEO Ed Whitacre said. A potential profit this year would end a five-year streak of losses and mark a turnaround for the U.S. automaker, which emerged from a U.S. government-financed bankruptcy in July after slashing debt and labor costs, Reuters reported. Whitacre, who replaced Fritz Henderson as CEO in December, has aimed to move faster to jump-start sales and launch an initial public offering that would allow the U.S. government to reduce its majority stake in GM. "In January, I said we could earn a profit in 2010, if everything falls into place," Whitacre said in a memo to staff, which was obtained by Reuters. "Our first quarter financial results will show us an important milestone, and I'm pleased to say that I anticipate solid operating results when we report our first quarter financials in May," he said. The automaker has said it will report its first-quarter results in mid-May. Last week, GM reported a $4.3 billion 2009 net loss covering the period from its emergence from bankruptcy in July through the end of the year, in the automaker's first full account of its new balance sheet as a restructured company. "Our 'fresh start' accounting not only closed the door on 2009, it is a major milestone in our journey to becoming a public company again," Whitacre said in the memo. Hit by losses of about $88 billion from 2005 through the first quarter of 2009, GM was given $50 billion of government financing to restructure in a bankruptcy steered by the U.S. Treasury, which remains a 61 percent owner of GM. As part of efforts to push for a faster turnaround, Whitacre has shaken up senior management, including sales and marketing teams, in recent months. GM reshuffled its sales organization in March, putting North American President Mark Reuss in charge of sales; and GM executives have said Whitacre has been clear he will hold them responsible for delivering on a promised turnaround. The bankruptcy restructuring helped the “new GM” eliminate debt and build its cash, but the automaker's sales overall remain under pressure as it eliminates four unprofitable brands: Pontiac, Saturn, Hummer and Saab. The automaker's U.S. sales were up 16 percent in the first quarter from a year earlier, when the industry was hitting its lowest levels since the early 1980s and GM was sliding toward bankruptcy. But GM's U.S. market share of 18.7 percent in the first quarter was down from 19.6 percent for all of 2009, a year in which it lost 2.5 percentage points of U.S. share.

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