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GM : Profit Likely in 2010

Stocks in this article: F MTLQQ.PK

DETROIT ( TheStreet) -- General Motors said it lost $4.3 billion in the second half of 2009, but CFO Chris Liddell said the automaker will likely be profitable for the first quarter as well as the current year.

"Despite the (2009) results, I do believe we have a chance of achieving profitability this year, at least at the operating level," Liddell said on a conference call with reporters and analysts. "I'm very happy with the progress we made in the first quarter towards the goal of profitability."

Not surprisingly, with its costs stripped down in bankruptcy, GM is well-positioned to benefit from the global recovery of the automobile industry. "We don't need the industry to be significantly better to achieve profitability," Liddell said, adding that "China continues to be very strong."


Asked whether he was underselling the company's prospects, Liddell responded: "I think there is a danger of overpromising and underdelivering. I would rather turn that around the other way. I don't want to predict profitability or anything like that and then disappoint."

He declined to be pin downed on whether GM is seeking to maintain a specific market share after cutting back to just four U.S. brands, saying: "I see market share as an output, not an input." He also continued to be vague on the timing of GM's IPO, saying that will occur "when the market and when the company are ready."

Asked the impact of recently past federal health care legislation, controller Nick Cypress said it would be minimal. Also, on a positive note, he said that because of the United Auto Workers takeover of the VEBA, "We are out of post-65 health care - we are pretty much out of that business."

The new GM was formed July 10, 2009, following a bankruptcy and the acquisition of substantially all the assets and certain liabilities of Motors Liquidation Co. (MTLQQ.PK)or old GM. It also completed fresh-start accounting. Stock in Motors Liquidation Co. continues to trade, although it has no value.

For the period July 10 through Dec. 31, the company had revenue of $57.5 billion and a net loss of $4.3 billion.

The loss included the impact of a $2.6 billion settlement loss related to the UAW retiree medical plan and a $1.3 billion foreign currency loss. Those losses could be considered as one-time items, meaning the company was essentially at break-even, Liddell said.

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