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More Road Bumps for GM

The world's largest automaker, General Motors (GM - Get Report), 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."

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