Earnings Preview: General Motors

General Motors (GM) is expected to report Q1 earnings before market open Wednesday (April 30) with a conference call scheduled for 9:30 am ET.

Guidance

Analysts are looking for a loss of ($1.54) on revenue of $40.78B. The consensus range for EPS is all over the place, at a loss of ($3.43) to a profit of 5c, with a revenue range of $38.27B to $43B, according to First Call.

On April 1, the company reported March sales down -19.2% to 383,732, or -13% when adjusted for days; cars sales were down -14.2% and truck sales were down -18.7%. GM has closed 30 factories this quarter and may close more.

Industry insiders believe the strike at parts manufacturer American Axle (AXL) will continue to hurt sales and plants and sources believe the strike could threaten production of GM's Chevrolet Malibu sedan. Despite the strike, GM North American sales chief Mark LeNeve has said the company's inventory of full-size pickup trucks was "more than adequate."

The company recently released global sales figures of more than 2.25M vehicles with 64% of global sales outside of the U.S. Another issue putting pressure on GM is that parts supplier Delphi (DPHIQ), under bankruptcy court protection and having difficulty raising the $6.1B it needs to leave Chapter 11, may need to get more help from GM, which is reviewing taking more of Delphi's pension liabilities.

Analyst Views

Based on the view of an S&P analyst, the U.S. is likely in a recession, and with weak housing markets, the analyst believes high-priced items such as automobiles will see lower sales. However, the analyst, who upgraded shares on March 12 to Hold from Sell, expects net income to rise significantly in 2010 on higher volume, and savings from a change in UAW benefits. Despite trouble in the credit markets, the company still expects the U.S. economy to recover in 2H08, which will inevitably pull auto sales higher.

Comments

[RafaelGrillo]

GM is doing the right things in terms of their product line up-and the marketing of their different brands. They have raised the bar in terms of brand equity, segmentation and product design. I've devoted several articles to analyze this turnaround in my site. The confluence of a weaker dollar, more attractive offers and innovation (moreover in their Cadillac and Chevrolet divisions) should position GM to emerge as a stronger company from the current economic downturn.