General Motors Corp. posted a $6 billion net loss in the first quarter, and revenue plummeted 47 percent amid a global economic downturn and low sales that have helped push the automaker to the brink of bankruptcy.
GM spent $10.2 billion more than it took in during the first quarter, a cash burn that was partially offset by $15.4 billion in federal loans that has kept the company afloat since December. GM ended the quarter with $11.6 billion in cash and marketable securities, down from $14.2 billion at the end of 2008.The automaker's revenue was $22.4 billion down from $42.4 billion in the first quarter last year.
The loss of $9.78 per share, the automaker's eighth-straight quarterly loss, compares to a $3.3 billion net loss, or $5.80 per share, a year earlier.
Revenue in North America for the first quarter was $12.3 billion, compared to $24.5 billion a year ago.
The results fared better than the $11.05 per-share loss Wall Street was expecting, according to estimates of 10 analysts surveyed by Thomson Financial Network. With more than 610 million outstanding shares, that would have meant a loss of more than $6.7 billion.
The automaker, surviving on federal loans, has until June 1 to reach money-saving concessions with the United Auto Workers and bondholders or face a potential Chapter 11 bankruptcy filing. GM President and Chief Executive Officer Fritz Henderson has said a bankruptcy filing is probable but not the preferred route.
"The rumors and speculation about bankruptcy had some impact in terms of our overall retail share performance," Chief Financial Officer Ray Young said today. "That clearly impacted our overall level of sales and production."
Auto analyst Kip Penniman of KDP Investment Advisors said bankruptcy remains the most likely outcome.
"Results were awful, as expected. However, GM's cash burn was even worse than we were expecting," Penniman wrote in a research note today.
The loss comes on a day in which GM is restarting concession talks with the UAW and presses ahead with plans to cut plants, jobs, dealerships and eliminate about $44 billion in debt as part of a broad restructuring plan.
GM's restructuring plan involves cutting 21,000 U.S. factory jobs by next year -- 7,000 more than originally planned -- and closing 16 of its 47 U.S. manufacturing plants by 2012.
GM also reiterated today that it plans additional cuts among the ranks of salaried employees and executives.
"This is a defining moment in the history of General Motors, and we are committed to our plan, which we believe will lead to a stable and sustainable operating structure with a strong balance sheet," Henderson said. "Our goal is to fix this business once and for all to position ourselves to win in the long-term."
GM also incurred several one-time special items and charges, several of which were related to GMAC Financial Services, the automaker's lending division. The items included a $906 million gain on debt extinguishment.
The automaker retained a 49 percent stake in the finance company after selling 51 percent to Cerberus Capital Management LP in 2006.
GM also took an $822 million charge related to the reorganization of its Saab brand. Saab, which GM is trying to sell, filed for reorganization in February in the Swedish equivalent of a Chapter 11 bankruptcy.
Excluding those items and charges, GM lost $5.9 billion, or $9.66 per share.
GM's auto results were beaten down by falling revenue in all of the automaker's global regions as global production dropped 40 percent, or about 903,000 vehicles.
"This is a pretty significant reduction that has a dramatic impact on cash flows," Young said.
Those losses were partially offset by the company cutting $3.1 billion in structural costs.
During a conference call with reporters and auto industry analysts, Young would not address a report in the New York Times that GM is pursuing a stake in Italian automaker Fiat SpA in exchange for its Latin American and European operations.
"We are talking to different parties," Young said. "Over the course of the month of May, we want to advance those discussions."
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