This Day On The Street
Continue to site
ADVERTISEMENT
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

GM Says It Needs Cash, and Fast (Update2)

Updated from 1:04 p.m. EST

General Motors (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 Delphi.

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."

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
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!
SYM TRADE IT LAST %CHG
F $15.91 0.95%
GM $37.11 1.28%
JCI $51.11 1.13%
LEA $115.74 1.79%
VC $102.14 -0.18%

Markets

DOW 18,034.93 +208.63 1.17%
S&P 500 2,100.40 +19.22 0.92%
NASDAQ 4,994.6020 +62.7870 1.27%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs