Wednesday, November 10, 2010

G.M. Posts Profit Ahead of Initial Public Offering

General Motors will post $2 billion in profits for the 3rd quarter and expects to end the year in the black for the first time since 2004.

Nick Bunkley of The New York Times reports:

New models, including redesigned versions of the Buick Lacrosse sedan and Chevrolet EquinoxChevrolet Cruze, have been brisk, and G.M. is about a month away from introducing the Chevrolet Volt, a plug-in hybrid car that it says represents the company’s future direction. crossover vehicle, have been well-received by critics and consumers, to the point that G.M. has struggled to keep up with demand. Early sales of a critical new small car, the

G.M.’s public stock offering, expected to occur Nov. 18 and be worth at least $10.6 billion, will allow the federal government to begin recouping the bulk of its $49.5 billion investment in the automaker. The government plans to initially sell about a third of its 61 percent stake in G.M., in the hope that it can divest the remaining portion as the shares’ value increase.

No comment yet from Sen. Richard Shelby of Alabama, who opposed helping the Big Three, saying "This is a dead end. It's a road to nowhere and it's a big burden on the American taxpayer."


  1. I think this is a much better piece on the subject ( ), but understand the NY times column length constraints. In the Atlantic peice, It's nice to see authors say they were too pessimistic about the GM bailout. It does point out a few key elements, i.e. that GM is not necessarily as healthy as these numbers show ($26B in unfunded pension liability), that now might not be the best time to be going IPO for GM, and that there that the union starts a campaign to restore the positions they ceded. I still have mixed feelings on the bailout, as it was structured, but am glad to see that like TARP, the programs are more economical for the Taxpayer than we once feared.

  2. Great points, Jim, especially about the IPO timing. The Atlantic piece is certainly worth a read. I'll post something on it soon. And there's no doubt that it's not smooth sailing for GM. They'll have to continue to adjust because it seems inevitable that their market share will continue to shrink, and they'll have to figure out a way to be profitable in that scenario.

    I will say that given the press that those opposing the bailout got on the front end, that it would only be fair to revisit the issue now with the same volume of coverage given that it hasn't been the disaster that many predicted.

  3. I intend to vote with my $$ by scoring some stock.

    I expect GM to be big-time profitable when the vehicle-replacement surge hits during the eventual economic recovery...because vehicle sales have been well below the historical wearout rate for quite a while now. Even if current unemployment turns structural, sales should be well into the humongous-profit range.

  4. The defunct stock certificates from GM and Delphi, as few as they are, look nice on my wall as a reminder of once stung....well, it's a little early for an offering at this time. I think if Mr Buffet invests some of his mega profits from silver into GM stock, I might be tempted to buy a couple of shares. Would that be a good indicator JWilly?


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