GM Posts best quarter in 6 years

[Nick R]

http://money.cnn.com/2010/11/10/news/companies/gm_earnings/index.htm

GM posted an almost $2 Billion profit in the 3rd quarter. The North American Operations posted a $2.1bn operating profit. Good Job, GM. Knew ya could do it.

 

[Spyder7]

LOL I'm really, really trying (very hard) to refrain from making the obvious comments on how easily a 2 billion dollar profit is when...

But who am I to argue with the numbers if it helps raise the price on the IPO

-Spyder

 

[Nick R]

Originally Posted By: Spyder7
LOL I'm really, really trying (very hard) to refrain from making the obvious comments on how easily a 2 billion dollar profit is when...

But who am I to argue with the numbers if it helps raise the price on the IPO

-Spyder


Deleted because it would simply be redundant.

 

[rshaw125]

Creative accounting to make the IPO successful. For instance GM postponed a pension contribution to the plan that is $24 billion in the red.

 

[David S.]

But the shareholders of the former GM were left empty handed - their shares lost all their value.

And before gloating you might have been a shareholder of the former GM too without knowing it, by means of a 401(k) account or mutual fund accounts.

 

[Nick R]

Originally Posted By: David S.
But the shareholders of the former GM were left empty handed - their shares lost all their value.

And before gloating you might have been a shareholder of the former GM too without knowing it, by means of a 401(k) account or mutual fund accounts.


Yes but everyone was crying and shouting for GM to go into bankruptcy. That is one of the things that can happen when you go chapter 11, or chapter 7.

 

[LS2JSTS]

Originally Posted By: rshaw125
Creative accounting to make the IPO successful. For instance GM postponed a pension contribution to the plan that is $24 billion in the red.


If GM continues to make a profit, this is their third quarter in a row in the black btw, then they will be able to pay their VEBA and pension debts on their own, OUT OF PROFITS. Would you prefer they go under and the pension debt be picked up by the taxpayer?

 

[rshaw125]

Originally Posted By: LS2JSTS
Originally Posted By: rshaw125
Creative accounting to make the IPO successful. For instance GM postponed a pension contribution to the plan that is $24 billion in the red.


If GM continues to make a profit, this is their third quarter in a row in the black btw, then they will be able to pay their VEBA and pension debts on their own, OUT OF PROFITS. Would you prefer they go under and the pension debt be picked up by the taxpayer?


No I would have preferred them to have reorganized through bankruptcy without the involvement of the tax payer.

 

[GMBoy]

Originally Posted By: rshaw125
Originally Posted By: LS2JSTS
Originally Posted By: rshaw125
Creative accounting to make the IPO successful. For instance GM postponed a pension contribution to the plan that is $24 billion in the red.


If GM continues to make a profit, this is their third quarter in a row in the black btw, then they will be able to pay their VEBA and pension debts on their own, OUT OF PROFITS. Would you prefer they go under and the pension debt be picked up by the taxpayer?


No I would have preferred them to have reorganized through bankruptcy without the involvement of the tax payer.



I respect your point of view and even working for GM, I thought the Gov't loan deal was wrong. However, it is MUCH better than what happened with the Banking industry. With that being said, even if GM went the regular bankruptcy path on their own, the taxpayers would still pay.....in the form of unemployment due to lost jobs, etc. So - it may have actually been better "overall" by going the way it did. As a GM employer and manager, I just keep my focus to the future in doing my job the best I can for the customer, the company and my family. Dwelling in the past is not an option for me because that is the past. I wish some others could move on, too.

 

[LS2JSTS]

What does the BK have to do with your original point?

If GM had gone through a typical BK, then the stockholders and the pensioners would NOT have been considered a protected class, nothing would be different except that the PBGC would have been forced to pick up the VEBA/Pension debts. As it is, the VEBA was given a stake in the company to protect the pensioners interest...and save that cost from falling on PBGC and the taxpayer by extension.

GM is [censored] if they do, and [censored] if they dont!

 

[Spyder7]

Originally Posted By: LS2JSTS
What does the BK have to do with your original point?

If GM had gone through a typical BK, then the stockholders and the pensioners would NOT have been considered a protected class, nothing would be different except that the PBGC would have been forced to pick up the VEBA/Pension debts. As it is, the VEBA was given a stake in the company to protect the pensioners interest...and save that cost from falling on PBGC and the taxpayer by extension.

GM is [censored] if they do, and [censored] if they dont!


I'm not really looking at it from that point of view - I'm more taking their profits posted within the context of a generous tax payer bail out, and with the IPO in mind as well.

From a simple accounting perspective (very amateur in my case as I am not an accountant), profit is reported after subtracting liabilities from assets and earnings (I know I'm simplifying).

In the case of this news, its a little premature to hail this as some major success when many of their liabilities have been wiped clean, while others have been deferred in such a manner that they aren't included in this 3rd quarter profit posting.

Its creative accounting at its finest, but with no need to cook the books as the books have already been manipulated as soon as the government intervened on their behalf.

This is the heavy grain of salt I take it with it, and why I laugh at the headline.

From my POV they have already crashed and burned, and the original investors wound up with nothing. I see this, the bailout, the IPO, and my skepticism comes up. Naturally they want to attract the best possible share price they can get on their IPO, as any company would. I'm fairly conservative, and I see them still as too fragile still - with all their 'ancient history' being rather too recent imho - to be an attractive investment, and the 3rd quarter profit postings and IPO are in my mind intertwined.

Just my own take on it.

-Spyder

 

[addyguy]

As far as I'm concerned, GM's numbers are completely meaningless, all of them. The govt., working weith GM, can play with then numbers to make them say whatever they want.

It wil be years and years before GM numbers mean ANYTHING. Don't get me wrong, I'm glad GM is still in business, but they aren't playing by the same rules as other businesses.

 

[LS2JSTS]

It's accounting, plain and simple...no creativity involved. The VEBA and pension debts are still on the books, this is merely a snap shot in time of the companies performance on a quarterly basis.

Continued quarterly profits ARE a major success and crucial to paying off the remaining VEBA and penson debts.

 

[LS2JSTS]

Originally Posted By: Spyder7


From a simple accounting perspective (very amateur in my case as I am not an accountant), profit is reported after subtracting liabilities from assets and earnings (I know I'm simplifying).

In the case of this news, its a little premature to hail this as some major success when many of their liabilities have been wiped clean, while others have been deferred in such a manner that they aren't included in this 3rd quarter profit posting.


-Spyder


Spyder,
You would have a point if we were trying to determine GMs net worth, or its value...but we arent. We are talking about a quarterly report of the companies revenue stream. No Company includes their total outstanding debt when calculating their quarterly performance. These outstanding debts aren't deferred as you state, they are still on the books and would play heavily in any discussion of net worth, but they are meaningless when discussing quarterly performance on an ongoing basis. It's beyond me how some cannot see the huge difference between the two.

I agree that these numbers in total would be vastly different if GM had not been allowed to shed a lot of bad debt and liability. But isn't that exactly why companies go through BK?

Let me ask you, if you were running GM. Wouldn't you want a picture of what the profit losses are today, what your cash flow looks like today...both irrespective of what the totals are? The totals are the totals, but the picture as it exists today, how the company is performing vs the market and in a profit/loss sense is valuable information to those within the company and to potential investors.

 

[rshaw125]

Originally Posted By: LS2JSTS
Originally Posted By: Spyder7


From a simple accounting perspective (very amateur in my case as I am not an accountant), profit is reported after subtracting liabilities from assets and earnings (I know I'm simplifying).

In the case of this news, its a little premature to hail this as some major success when many of their liabilities have been wiped clean, while others have been deferred in such a manner that they aren't included in this 3rd quarter profit posting.


-Spyder


Spyder,
You would have a point if we were trying to determine GMs net worth, or its value...but we arent. We are talking about a quarterly report of the companies revenue stream. No Company includes their total outstanding debt when calculating their quarterly performance. These outstanding debts aren't deferred as you state, they are still on the books and would play heavily in any discussion of net worth, but they are meaningless when discussing quarterly performance on an ongoing basis. It's beyond me how some cannot see the huge difference between the two.

I agree that these numbers in total would be vastly different if GM had not been allowed to shed a lot of bad debt and liability. But isn't that exactly why companies go through BK?

Let me ask you, if you were running GM. Wouldn't you want a picture of what the profit losses are today, what your cash flow looks like today...both irrespective of what the totals are? The totals are the totals, but the picture as it exists today, how the company is performing vs the market and in a profit/loss sense is valuable information to those within the company and to potential investors.


I think his point is that most companies would typically have made a payment to their pension plan.GM is not to doing this. The reason being the impending IPO.

 

[Spyder7]

^ That pretty much nails it. FWIW I don't think it makes GM "bad" or "immoral" in doing what any every corporation strives to do - make themselves as appealing to investors and consumers alike, so as to increase capital from both sources to cover operating costs present and future, as well as increase their ability to create growth and increase market share.

I just meant that, as indicated above, in the present situation they're in I take it with more than the usual grain of salt than I take similar news from Ford, who are in a different situation than GM is and who, as a publicly owned and traded corporation, is more easily scrutinized.

The OP's comments came across as if to suggest (whether intended or not) that GM was clear of any troubled waters and these 3 profitable quarters are proof that all of that is behind them. I think the profits need to be weighed against things like deferred payments and the fact that they are still majority government owned, with an IPO coming that they naturally want to fetch as high a price as possible. Even though all corporations generally desire high stock prices, this is much, much more true when the stock in question is that of an IPO.

To me the news is lukewarm at best, because, IMHO, their present condition is to transitional and fragile to read too much into it.

I would like to see them return to profitability (and this is a sign they may be heading there, but not proof they're close to it yet) and a public corporation again on par with Ford simply because I favor seeing North American corporations succeed, especially those operating within our ever disappearing manufacturing sector; even more so when the American public has a lot invested in it, such as in this one.

-Spyder

 

[LS2JSTS]

GM HAS made payements to the pension and the VEBA funds, or do you consider the value of their minority stake as worthless.

Please recall that the pensioners and VEBA were protected under the sham BK, that is why they currently own nearly 20% of the company. The UAW and VEBA were put ahead of bond holders and stock holders in order to make that payment. To say that GM hasn't made payment to their retiree liability is factually wrong. The stock share they stole/own/earned/blackmailed out of the legitimate owners hands WAS in fact a HUGE payment to the retirees and VEBA. On Thursday, next week, the UAW-VEBA minority shares value will be a known quantity, will you two consider that a payment to their pensioners?

On top of that GM will continue to make payments to the VEBA and pension funds as time goes on...as further profits are made.

 

[daves87rs]

Glad to see a profit.

 

[Torino]

Well, there were a lot of votes purchased with the bailout--with other peoples money. What else is new? Fortunately, I am NOT for sale. John--Las Vegas.

 

[Cutehumor]

looks like getting rid of hummer, pontiac, and saturn helped the general out.