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Barra's GM Has Low Bar, High Expectations

NEW YORK (TheStreet) -- New CEO Mary Barra got just what she probably needed with her first General Motors (GM - Get Report) earnings report -- a low bar she may be able to jump over.

Barra was appointed CEO of GM in December, and the company's latest earnings report was for the last quarter under her predecessor, Dan Akerson. It wasn't a great one.

Last week, the company announced it earned $913 million in the fourth quarter, or 67 cents per share, excluding some charges, on $40.5 billion in revenue. That disappointed analysts who were expecting earnings of 88 cents per share.

Full-year profit fell 22% to $3.8 billion, but because U.S. operations earned $7.5 billion in operating profit, the company wrote profit-sharing checks of $7,500 for each of its union employees, up from $6,750 a year earlier.

Barra will get full credit if there is a turnaround in Europe and South America, where results were poor, and if forward momentum in the U.S. can continue. Barra also knows the spotlight will be on her because of her sex, and she got a taste of that when her own pay packet was announced.

Barra is getting $4.4 million in cash and short-term stock incentives this year. That's less than the $9 million predecessor Dan Akerson took in under the government's salary restrictions, but Barra's also getting $10 million in long-term compensation, stock tied to performance, which should boost her pay to $14.4 million, 60% higher than what Akerson was getting.

Because Barra is female, some reporters asked if she is being paid adequately. If she were male, the question might be whether she is getting too much -- $14.4 million per year is a lot for an unproven CEO.

Barra will have to earn her money by making hard decisions about Europe, where the company hasn't turned a profit since the 20th century, and in Asia, where the declining Japanese yen is making Japanese car companies more competitive.

Some of those hard decisions are already being made, including an exit of Chevrolet in Europe, embarrassing given the brand's new shirt sponsorship deal with the Manchester United soccer club.

GM is also investing roughly $330 million in a Polish engine plant, due to come online in 2017, which should deliver lower costs for the European car group. GM's market share in Europe fell in 2013, and the company has failed to crack the continent's profitable luxury market.

January sales in China, where GM works through a joint venture, were strong at 348,061, up 12% from a year earlier, but inflation in Latin America is slowing profits, with sales of just 260,000 vehicles during the fourth quarter, down 7%. Profits should disappear there until economies in the region regain their footing.

In the U.S., its strongest market by far, GM is facing investor concern that it's discounting its popular trucks and generally losing momentum.

The company's goal in the U.S. is a profit margin of 10%, but the discounts dropped that to 8%, and if the full quarter shows lower profit or slower sales, the worry could quickly turn into a rout.

Barra is using her appointment in marketing to send a message that this is a new company, with more liberal values than before. GM commercials for the Sochi Olympics appear to promote diversity, with images of gay families alongside others in both its product ad for the Traverse and its image ad run during the opening ceremony.

GM was a controversial stock over the last few years because of the government bailout, and Barra's early moves indicate the company's politics won't change. But its results need to.

At the time of publication, the author owned shares in GM.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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