GM Posts $5.98 Billion Loss Amid Steep Drop in Revenue
File - General Motors President and CEO Fritz Henderson addresses the companies viability plan in Detroit, in this April 27, 2009 file photo. General Motors Corp. said Thursday May 7, 2009 it lost $6 billion in the first quarter and spent $10.2 billion more cash than it took in, as a sales slump cut revenue by $20 billion. The nation's biggest domestic automaker lost $9.78 per share, compared with a loss of $3.3 billion, or $5.80 per share, in the year-ago period. (AP Photo/Paul Sancya, File)
(Paul Sancya - AP)
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Friday, May 8, 2009
General Motors, facing the prospect of bankruptcy, posted a loss of $5.98 billion for the first three months of this year as revenue continued to slide because of the economic crisis and slumping auto sales.
GM's losses were offset somewhat by the company's restructuring efforts and by an infusion of loans from the federal government, the automaker said yesterday.
GM has until the end of the month to cut costs further and win stakeholder concessions. If it fails, the government will likely force it into bankruptcy protection.
GM lost $9.78 per share, compared with a loss of $5.80 per share, or $3.28 billion, a year earlier. Cash on hand totaled $11.6 billion -- approaching the minimum reserves needed to continue operations.
Revenue fell 47 percent to $22.4 billion, compared with revenue of $42.4 billion in the same quarter last year, as GM cut production. Ray Young, GM's chief financial officer, warned that such a drop could be dangerous.
"Once you start losing revenue, you get yourself into a vicious circle in which you cannot recover," he said. Talk about bankruptcy has pushed customers even further away from dealerships, Young said.
Young emphasized that the company prefers to restructure out of court. But if it should be forced to seek Chapter 11 protection, the reorganization needs to happen "very, very quickly."
"We are closely following Chrysler proceedings," Young said.
