GM posts big loss as U.S. sales hurt
Weakness at GMAC also hurts results, but overseas vehicle sales help company top analysts' forecasts.

By David Goldman, CNNMoney.com staff writer
Last Updated: April 30, 2008

NEW YORK (CNNMoney.com) -- The nation's largest automaker, General Motors Corp., announced a large first-quarter loss Wednesday, due in large part to struggles from its former finance wing GMAC and slumping U.S. car sales.

But the loss was narrower than expected and sales topped forecasts, helping to lift shares of GM (GM, Fortune 500) 3.8% to $22 in pre-market trading.

GM posted a net loss of $3.3 billion, or $5.74 per share, which was wider than the $42 million, or 7-cent-a-share loss from continuing operations in the same period last year.

Excluding one-time losses from GMAC and $731 million in bankruptcy support for auto parts manufacturer Delphi, GM lost $350 million, or 62 cents per share. Analysts polled by Thomson Financial - who generally exclude one-time events from their forecasts - were looking for a deeper loss of $1.60 per share.

Though GM sold 51% of its financial services firm GMAC last year, large losses from the automaker's former finance wing continue to weigh on the company. GMAC (GMA) announced last week that it lost $589 million during the first quarter, though results began to improve slightly in its ailing mortgage loan unit, still reeling from the subprime home loan fallout.

Sales fell 1.6% to $42.7 billion, but they topped analysts' forecasts of $40.8 billion.

Tough environment for auto sales
Hurting sales was the continuing two-month-long American Axle (AXL) workers strike, accounting for $800 million in lost revenue.

Revenue was down mostly on poor U.S. auto sales. Though GM said sales of its vehicles outside the United States rose 20%, with particular strength in China, Brazil, Russia and India, low American numbers dragged total auto sales down nearly 1% below year ago numbers. That's despite the company recording a record 64% of its vehicle sales from outside the United States.

"We continue to leverage our global product portfolio to take advantage of tremendous growth in key emerging markets, while at the same time taking the appropriate actions to deal with the challenging economic conditions in the U.S.," said GM chief executive Rick Wagoner in a statement released with the earnings report.

The difficult American sales environment led GM to join other U.S. automakers and forecasters in slashing their 2008 North American industrywide auto sales target to a seasonally adjusted rate of 15 million, down from an earlier estimate of 16 million. If the American auto industry only sells 15 million cars this year, it will be the poorest showing since 1995.

The company said Monday it will eliminate one shift at four of its North American pickup truck and large SUV factories, resulting in about 3,500 job cuts. GM said the cuts are due to slumping sales, brought on by high gas prices coupled with an economic slowdown.

The results come after Japanese rival Toyota (TM) - the No. 2 in U.S. auto sales - announced last week its global sales were up 2.7% during the quarter, enough to pass GM as the world's largest automaker.

And No. 3 Ford (F, Fortune 500) also fared well in the first quarter, announcing last week that it had posted a $100 million quarterly profit, boosted by strong sales abroad. The gain surprised analysts who were looking for another loss like they were for GM.

Excluding one-time losses from GMAC and $731 million in bankruptcy support for auto parts manufacturer Delphi, GM lost $350 million, or 62 cents per share. Analysts polled by Thomson Financial, who generally exclude one-time events from their forecasts, were looking for a deeper loss of $1.60 per share.