General Motor’s Corp., one of the world’s largest automaker reported a hefty $39 billion loss in its third quarter.
“We do not believe this charge has any bearing on the management’s view of GM’s long-term prospects,” Rod Lache, a Deutsche Bank analyst in New York, wrote in a report. GM should be able to re-establish the tax assets “once it achieves a three-year cumulative profit position in North America.”
GM is writing down the tax assets because it may not be able to generate enough earnings to use the benefits. The move is another sign of a worsening outlook for the U.S. economy and auto sales, as GM cited mortgage-related losses at its partly owned GMAC LLC finance unit and “more challenging” auto-market conditions in the U.S. and Germany.
GM said the loss also included an after-tax gain of $3.9 billion from the sale of its Allison Transmission unit, $1.6 billion in pension-service costs related to prior labor agreements, and $400 million in charges related to its former Delphi Corp. subsidiary.
So much money is being lost in the auto market, when does GM realize that it’s better off to sell the company, or merge with someone. Toyota has been dominating the U.S. market, but the downturn of the economy has really struck GM. However, GM is trying to capture the expanding market in Asia, but the competition is server.
Another factor that has been causing GM to lose alot of its cash is - the cash drain.
“We do not believe this charge has any bearing on the management’s view of GM’s long-term prospects,” Rod Lache, a Deutsche Bank analyst in New York, wrote in a report. GM should be able to re-establish the tax assets “once it achieves a three-year cumulative profit position in North America.”
GM is writing down the tax assets because it may not be able to generate enough earnings to use the benefits. The move is another sign of a worsening outlook for the U.S. economy and auto sales, as GM cited mortgage-related losses at its partly owned GMAC LLC finance unit and “more challenging” auto-market conditions in the U.S. and Germany.
GM has said the union retiree health fund will drain cash next year by $3.3 billion before adding $2.8 billion to cash flow in 2010 and $3.3 billion in 2011.
Pensions everywhere. That’s a good thing.
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