GM Submerged in Red Ink

If its recent labor deal means a brighter future for General Motors (GM), that wasn't immediately evident on Wednesday, when the largest U.S. automaker reported its biggest quarterly loss ever.

Hampered by a massive accounting-related charge, along with continued turmoil at GMAC's mortgage business, GM reported a net loss of $38.96 billion, or $68.85 a share, for the quarter. That compares with its loss of $147 million, or 26 cents a share, for the same quarter last year.

The results reflect a one-time accounting charge of $37.4 billion on a valuation allowance against GM's deferred tax assets and a $630 million drop in earnings from GMAC, its former in-house finance business. Those items buried an improved performance at GM's core automotive operations in North America, though that business was still in the red.

Shares of GM recently were down $1.33, or 3.7%, to $34.83.

The valuation allowance, announced late Tuesday by GM, was triggered by its cumulative three-year losses, troubles at GMAC and a worsened outlook in the U.S., Canada and Germany. The charge requires the company to account for the fact that deferred tax benefits on its balance sheet may not be used.

"The tax loss adjustment is not a big deal," said Peter Morici, a business professor with the University of Maryland, in a note. "GM was too optimistic about future profits so it will not be able to use the accumulated losses against taxes as planned."