Updated from 1:04 p.m. EST
(GM - Get Report)
posted a multibillion-dollar loss for the third quarter and warned Friday that its cash position is going to become more precarious unless the economy improves or it manages to get some kind of assistance.
The Detroit-based automaker reported a loss of $2.5 billion, or $4.45 a share, for the quarter, including items. In the same period a year earlier, GM had a loss from continuing operations of $42.5 billion, which counted a noncash charge of $38.3 billion.
"Tight credit, rising unemployment, declining income, falling stock markets and continuing deterioration in the housing market in the U.S., resulted in an abrupt halt in consumer spending, with most consumers exiting the vehicle market," GM said in a press release. "Many of those still intending to purchase vehicles were denied financing, or found the cost of financing prohibitive."
Far more troubling than the quarterly loss were GM's comments about its liquidity. During the third-quarter, GM had negative adjusted operating cash flow of $6.9 billion. The company also drew down the remaining $3.5 billion from its secured revolving credit facility and made $1.2 billion in bankruptcy-related payments to parts supplier
GM believes its operating cash flow in the fourth quarter will be "much improved" from the third quarter and more consistent with the first half of the year, and it has identified an additional $5 billion of "incremental liquidity actions." All told, GM has taken steps to improve its liquidity by $20 billion through 2009.
However, GM cautioned that even by following its plan, its estimated liquidity for the rest of this year "will approach the minimum amount necessary to operate its business."