GM Teeters on Brink as Earnings Worse Than Expected
Troubled General Motors just released its third-quarter earnings moments ago, and they're much worse than analysts expected.
Over the three-month quarter, GM burned through $6.9 billion in cash, a rate of $2.3 billion per month.
By comparison, GM burned through $1 billion per cash in the second quarter of this year.
In the third quarter, GM lost $2.5 billion ($4.45 a share), also more than expected. Minus one-time charges, GM's net loss from continuing operations was $1.6 billion in the third quarter of 2007.
Third-quarter GM revenue was $37.9 billion, down from $43.7 billion in the third quarter of 2007.
GM's earnings were delayed more than 50 minutes this morning, causing the New York Stock Exchange to halt trading in GM shares at 11:04 a.m. They resumed trading at about 11:30 a.m.
Today's earnings may significantly shorten GM's lifespan as a standalone automaker.
When GM was burning $1 billion per month, economists predicted the automaker would have only a few more months before it would be forced to declare bankruptcy.
GM was blunt about its condition in its earnings release: "Even if GM implements the planned operating actions that are substantially within its control, GM's estimated liquidity during the remainder of 2008 will approach the minimum amount necessary to operate its business."
Translation: GM is running out of money.
GM execs have said for weeks that bankruptcy is not an option. The heads of GM and the other Detroit Big Three have been in Washington asking lawmakers for an additional $25 billion in direct loans, in addition to $25 billion approved last month.
But automakers may not see that money for months because of government red tape.
What may be an option for GM is a merger with Chrysler, and the heads of both companies have been working toward that in recent weeks.
GM chief executive Rick Wagoner is expected to speak to CNBC and other media shortly. Will he announce a merger? Or a company reorganization? Or will he step down? Or will nothing change?
Check back here for news. We'll have it as soon as it breaks.
-- Frank Ahrens
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