By David Silver
Nothing against former GM CEO, Rich Wagoner, but the conference call hosted by Vice Chairman and CFO, Steve Liddell, was much more interesting than any of the conference calls for the "Old GM." Not only does that accent keep everyone enthralled, Mr. Liddell also handled the questions with such poise and confidence that you would have thought he grew up talking about cars.
His expectations for the remainder of the year had a touch of conservativism (profitability could be possible), but Mr. Liddell put it perfectly when responding to a reporter's question, "GM had a question of overpromising and underreporting, I hope to reverse that, and under-promise and over-report."
General Motors reported a $4.3 billion loss on revenues of $57.5 billion in the second half of 2009 after emerging from bankruptcy protection on July 11, 2009. GM reported a $3.4 billion fourth quarter net loss and revenue of $32.3 billion. GM ended 2009 with $36.2 billion in cash, compared with $14.2 billion at the end of 2008 under its predecessor company. The automaker said that it expects to release first quarter results by the middle of May, returning to a normal pattern for US corporations.
The company is using a Fresh Start Accounting Principle as the "Old GM" is not comparable to today's GM. Taking four brands away and many of the worst assets just wouldn't be a legitimate comparison.
The company indicated that it will file its 10-Q (quarterly report) and 10-K (annual report) later today but gave a breakdown of its operations and North America definitely improved, not quite to the level that we expected, but excluding the "special" or one-time charges, EBIT improved dramatically year over year (but still was negative).
Europe is the biggest concern for us moving forward as the incentive programs in many countries are expected to end in the coming months. These incentive programs have been responsible for most of the resurgence in European auto sales (think nine months of cash for clunkers).
The company has $36.2 billion of cash and debt with a book value of $15.8 billion (far different from the $50 billion of debt before entering bankruptcy) and cash flow is definitely experiencing a significant improvement. Remember at the end of 2008, Chrysler and GM limped to Congress asking for money to help stave off bankruptcy. Ford (F) and the UAW were there too, but former CEOs Rich Wagoner (GM) and Bob Nardelli (Chrysler) did most of the talking.
A year later, people at the Company are talking about being profitable for the full year and even being owned "by the public." I thought that the American public already owned GM (or at least 60% of it). I still believe that for the company to IPO by the end of this year, it will take everything going perfect through the remainder of the year, and we all know how likely that is to happen. I have modeled for some hiccups in auto sales over the next few months as incentives begin to be pulled back to get more higher margin sales.
Disclosure: Author long F