When reports indicated that GM might soon request more cash, many observers puzzled at the news. Hadn't GM just received a massive $13.4B USD loan from the federal government? Well, $13.4B USD doesn't last too long when you're losing $9.6B USD a quarter. (ouch!!!!) That's how much GM lost in the Q4 2008, according to its earnings reports released today.
The struggling automaker has seen its sales plummet to oblivion thanks to the ravaged economy. And while its Japanese and Korean competitors are able to sustain on a broader world market, GM is largely unable to reach customers in places like Korea or Japan thanks to a variety of conditions, such as lack of dealerships allowed in Japan and tariffs in Korea. Even its domestic competitor Ford is a bit more fortunate in that it had a larger cash reserve then GM.
To put it concisely -- GM is in deep trouble, and bankruptcy seems more and more like the only option. In total, $1.5B USD of GM's losses come from continuing operations, such as the development of GM's upcoming flagship product, the Chevy Volt. About $3.7B USD of the losses came from one-time expenses, such as writing down the assets of the struggling Saab and Hummer brands, which GM wants to sell. It also spent $900M USD on restructuring and capacity changes. In total the losses put GM $30.9B USD into the red for the year, the second biggest yearly loss in the company's 100-year history.
In the short term, GM needs $2B USD more in March or it will run out of cash. The basic problem is that GM is not selling enough vehicles. It saw its sales drop 34 percent in Q4 2008 to $30.8B USD. That big drop exceeded even analysts' very pessimistic predictions.GM's Wagoner released a carefully worded statement, saying, "We expect these challenging conditions will continue through 2009."
His Chief Financial Officer, Ray Young, added, "We don’t know if we’re going to receive additional government funding. That’s the reason we objectively put the statement in the press release."GM already cut 47,000 jobs last month, amid the tens of thousands it has already cut.
That's not all of GM's problems, though. In total, it has $62B USD in debt not including government loans.
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The struggling automaker has seen its sales plummet to oblivion thanks to the ravaged economy. And while its Japanese and Korean competitors are able to sustain on a broader world market, GM is largely unable to reach customers in places like Korea or Japan thanks to a variety of conditions, such as lack of dealerships allowed in Japan and tariffs in Korea. Even its domestic competitor Ford is a bit more fortunate in that it had a larger cash reserve then GM.
To put it concisely -- GM is in deep trouble, and bankruptcy seems more and more like the only option. In total, $1.5B USD of GM's losses come from continuing operations, such as the development of GM's upcoming flagship product, the Chevy Volt. About $3.7B USD of the losses came from one-time expenses, such as writing down the assets of the struggling Saab and Hummer brands, which GM wants to sell. It also spent $900M USD on restructuring and capacity changes. In total the losses put GM $30.9B USD into the red for the year, the second biggest yearly loss in the company's 100-year history.
In the short term, GM needs $2B USD more in March or it will run out of cash. The basic problem is that GM is not selling enough vehicles. It saw its sales drop 34 percent in Q4 2008 to $30.8B USD. That big drop exceeded even analysts' very pessimistic predictions.GM's Wagoner released a carefully worded statement, saying, "We expect these challenging conditions will continue through 2009."
His Chief Financial Officer, Ray Young, added, "We don’t know if we’re going to receive additional government funding. That’s the reason we objectively put the statement in the press release."GM already cut 47,000 jobs last month, amid the tens of thousands it has already cut.
That's not all of GM's problems, though. In total, it has $62B USD in debt not including government loans.
source