Bankruptcy

GM Earns Profit

By mcbride

Based on an increase in sales of its cars and cost reductions a result of its bankruptcy and other cost cutting moves, GM reported a profit of 865 million for last quarter, on revenue of 31.5 billion dollars, which was up 40%.  Note that for the same period, Ford (which avoided bankruptcy and government loans) turned a profit of 2.1 billion.  ?The overall profit for the first quarter compares with a loss of $6 billion by the old G.M. a year earlier.  The news comes several weeks after G.M. repaid the balance of its $8.2 billion loans from the American and Canadian governments. G.M. aired commercials featuring its chief executive, Edward E. Whitacre Jr., highlighting the loan repayment, but critics, including some members of Congress, accused the company of misleading consumers into thinking all $50 billion given to the company had been repaid.  The Treasury Department still owns 61 percent of G.M., a stake it received in exchange for most of the money it gave to the carmaker. Taxpayers can recoup that money only through the sale of that stock.

G.M. intends to have a public stock offering as soon as the fourth quarter of this year. Federal officials now project the Treasury will recover most of the money given to G.M. and argue that any loss that results was less costly than the damage that a collapse of the company would have inflicted on the country?s economy.?

Here is a link: http://www.nytimes.com/2010/05/18/business/18auto.html?src=mv

Michael

Full post as published by Texas Lawyer Blog on May 17, 2010 (boomark / email).