DETROIT (Reuters) - General Motors Corp. (GM.N) on Thursday posted its sixth straight quarterly loss as it took more than $1 billion in restructuring-related charges, but the company's stock shot higher as investors reacted to signs the automaker's turnaround was gaining traction.þþAnalysts said improvements in GM's troubled North American auto operations and a strengthened cash position were positive, but cautioned the company faced continued risks from rising gas prices and the prospect of a shutdown at a key parts supplier.þþShares of GM rose over 10 percent in Thursday trade, the biggest single-day gain since May, when billionaire Kirk Kerkorian made a bid to double his stake in the automaker.þþThe world's largest automaker reported a first-quarter loss of $323 million, or 57 cents per share, compared with a loss of $1.3 billion, or $2.22 per share a year earlier. Revenue rose to $52.2 billion from $45.8 billion a year earlier.þþGM's embattled Chief Executive Rick Wagoner hailed the results as evidence of the progress the company has made in cutting costs and restoring its auto operations to profitability after a $10.6 billion loss in 2005.þþExcluding one-time items, but including a $1 billion pre-tax health-care charge, GM lost $529 million, or 94 cents a share. Excluding that health-care charge, equivalent to $1.20 a share, GM would have posted a profit of 26 cents a share.þþOn that basis, analysts on average had forecast a loss of 42 cents per share, according to Reuters Estimates.þþThe automaker posted a gain of just over 4 percent in global vehicle sales, but a drop of 5 percent in the U.S. market, where its strategy hinges on the success of a new line of higher-margin sport-utility vehicles.þþArgus Research analyst Kevin Tynan cautioned that higher gas prices, now above $3 per gallon in many U.S. markets, could sap demand for GM's new line of SUVs, known as the GMT-900 series.þþ``That could really short circuit the cost benefits GM expects in the second half of the year,'' he said. þþCUTTING COSTS, SHORING UP LIQUIDITYþþIn response to dwindling U.S. market share, GM plans to cut 30,000 jobs and close a dozen plants, and has cut top executive pay. GM also halved its dividend, cutting the payout for the first time in more than 13 years.þþGM has set a target of cutting $7.5 billion from its annual costs by the end of 2006, including about $4 billion in cash savings, a key measure for the company which has been hit by credit downgrades and Wall Street talk of an eventual bankruptcy filing if its turnaround sputters.þþPressure on Wagoner mounted in the first quarter as the company restated earnings due to accounting errors. But GM also took a series of restructuring steps, and its board issued an unusual statement affirming its support for Wagoner.þþIn an effort to cut labor costs and avoid a crippling shutdown at former subsidiary Delphi Corp. (DPHIQ.PK), GM offered buyouts to more than 125,000 factory workers, including 13,000 workers at the now-bankrupt Delphi.þþDelphi remains in talks with its unions on wage cuts as it emerges from bankruptcy, and GM executives said concluding those negotiations and avoiding a strike was a key priority.þþ``We are confident we will find a solution. Work stoppage doesn't benefit anyone,'' said Chief Financial Officer Fritz Henderson.þþIn order to raise cash and lower borrowing costs for its finance arm, GM has also agreed to sell a majority stake in GMAC for about $14 billion to a consortium led by hedge fund Cerberus Capital Management LP.þþGMAC posted earnings of $605 million, partly offsetting a loss of $721 million from GM's core auto operations.þþGM ended the quarter with $21.6 billion in cash and equivalent assets in a defined-contribution pension fund, up from $20.4 billion at the end of 2005.þþ``They've got a negative cash burn run rate which is still going to be close to $5 billion this year, and that is really no change,'' said Dan Genter, president of RNC Genter Capital Management, whose firm holds about $50 million in GMAC bonds.þþGenter said GM's results had been bolstered by temporary factors such as a $2 billion sale of its stake in Suzuki Motor Corp. (7269.T) and a relatively low outlay of $1.3 billion in capital investment. GM expects to invest $8.7 billion in new equipment over the course of 2006.þþThe company will recognize another $300 million this quarter from the sale of a stake in another Japanese partner, Isuzu Motors Ltd.GM's decision to halve its common stock dividend will save the company $565 million annually, the company said. That step, and a cut in the pay for top executives had been urged as a crisis management measure by Jerome York, now a GM director and an adviser to Kerkorian, GM's largest individual investor.þþGM remains under investigation by the Securities and Exchange Commission for issues ranging from accounting for sales of precious metals to the way it booked payments from suppliers.þþGM said its first-quarter results could still be revised depending on the final accounting treatment of a pre-tax charge of $1 billion earmarked for a fund for future retiree health-care costs.þþThat charge reflected a deal with the United Auto Workers union to cut GM's spending on health care, which the automaker said would save it about $13 billion over six years.þþShares of GM were up $2.21, or 10.74 percent, at $22.78 on the New York Stock Exchange. GM's 8.375-percent bonds due 2033 rose to 74 cents on the dollar, up 1.25 cents on the day, according to MarketAxess.þþ
Source: NY Times
