US automaker GM reports losses of $6 billion
|Topics: General Motors
May 7, 2009
United States automobile company General Motors announced it has lost US$6 billion in the first quarter of 2009, amidst heavy declines in revenues. Not including special items, the firm said it had lost a net $5.9 billion dollars, or $9.66 per share.
In the first quarter of last year, GM had reported a loss of $381 million, or $0.67 per share. Most financial analysts had forecast the automaker's losses to be over $6.7 billion, or $11.05 per share. GM had also reported that it had spent $10.2 billion in an effort to prevent bankruptcy. The manufacturer has received over $15 billion in bailout money from the federal government.
The company has a deadline set at June 1 to draw up a restructuring plan. If it doesn't do so by then, it will be obliged to file for bankruptcy protection.
"We're focusing very much on the cost side of the business but once you start losing revenues you get into a vicious circle from which you can't recover," said Ray Young, the chief financial officer for GM.
"We continue to see a 60-80 percent chance of a GM bankruptcy. While the GM equity today is largely uninvestable, we increasingly believe GM may emerge substantially stronger from a bankruptcy - provided the Chapter 11 process is not overly drawn out - particularly given the scope of targeted dealer cuts," analyst Himanshu Patel said.
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