GM profit falls, shares tumble on weak outlook

General Motors Co posted a third-quarter profit that fell 15 percent after a loss in Europe and forecast that operating profit in the current quarter would be flat from a weak fourth quarter in 2010. GM vowed to slash costs and complexity to shore up margins in a sputtering economy but its fourth-quarter outlook disappointed investors and sent shares tumbling 8 percent on Wednesday morning on the New York Stock Exchange.
Chief Executive Dan Akerson said the top US automaker was not performing well enough, almost a year after a record IPO that capped the automaker's return from a US government bailout and bankruptcy. Chief Financial Officer Dan Ammann said GM needed to eliminate "cost and complexity" from its operations, suggesting the kind of campaign Ford Motor Co has run under CEO Alan Mulally for nearly five years.
GM, which boasts that its taxpayer-funded restructuring left it with a "fortress balance sheet," ended the third quarter with less than $3 billion in long-term debt. GM's third-quarter profit in Asia fell 29 percent as growth in China slowed and results in South America swung to a loss of $44 million from a gain of $163 million last year as its market share shrank due to an aging lineup of vehicles.
GM's net income in the third quarter fell to $1.7 billion, or $1.03 a share, compared with $2 billion or $1.20 a share in the year-earlier period. Analysts had expected 96 cents a share, according to Thomson Reuters I/B/E/S. Revenue rose to $36.7 billion from $34.1 billion last year. That was in line with analysts' expectations. GM emerged from bankruptcy in 2009 after a $52 billion taxpayer-funded bailout. The US Treasury owns 32 percent of GM's common shares, and how it unwinds that stakes remains an unanswered question.