This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

More Road Bumps for GM

The world's largest automaker, General Motors (GM), lost a whopping $8.6 billion last year.

Wait, no. Actually, it lost $10.6 billion.

GM widened its reported loss for 2005 by roughly $2 billion after adjusting some previously reported charges. The company said late Thursday it would delay filing its 10-K for 2005 until later this month, and its reported loss for the year will move to $18.69 a share from its prior announcement of $15.13.

Shares of GM were recently down 82 cents, or 3.4%, to $21.40.

"This is a blow to management's credibility, and it's embarrassing, but I don't think the economic impacts here are too dramatic," says Morningstar analyst John Novak. "In the end, it's just some changes in classification in accounting terms, and why wait to add these charges to your 2006 results and weigh down those results when you can add them to losses in 2005, a year that everyone agrees was terrible."

The added losses came from a variety of places in GM's business. The company boosted a charge related to its North American restructuring to $1.7 billion, up from the $1.3 billion it previously reported. That change reflects an increase in the provision for employee costs at plants where GM plans to stop production.

At GMAC, the company's financing arm, GM will record goodwill-impairment charges of $439 million, primarily relating to its commercial finance operating segment. At its residential mortgage subsidiary, ResCap, GM warned that accounting issues may impact its 2005 statements of cash flows.

Argus Research analyst Kevin Tynan says issues at GMAC could weaken GM's bargaining position as it tries to sell a portion of the unit to boost its credit ratings and add to its cash cushion.

"There's uncertainty about the accounting that bleeds into GMAC," Tynan says. "That has the potential to hold up a deal or even make one fall through. ResCap is the crown jewel of GMAC."

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,959.44 +154.64 0.87%
S&P 500 2,078.54 +7.89 0.38%
NASDAQ 4,781.4240 +16.0440 0.34%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs