handily beat Wall Street earnings expectations in its quarterly results Thursday, but falling margins at the world's largest automotive company tempered investor reaction and its shares were little changed.
GM reported earnings of $1.86 per share, beating the
First Call/Thomson Financial
consensus of $1.81, but sharply missing the 1998 fourth quarter of $2.48.
Net income for the quarter dropped 35% to $1.1 billion from $1.7 billion in the fourth quarter of 1998.
Revenue increased 4% to $46.3 billion from $44.6 billion in the same quarter in 1998.
A comparison of the quarterly results was not entirely meaningful because the company had an exceptionally strong fourth quarter in 1998 as it was recovering from debilitating strikes.
"It looks like results were pretty good over last year where they had a rapid inventory buildup so the quarters were tough to compare," said Michael Pak, an analyst at
who rates GM a hold. His firm has not underwritten any offerings from the auto maker.
Some analysts expressed concern about decreasing margins as GM's automotive net margin decreased by almost a third to 2.8%. North American automotive margins were particularly worrisome as they fell 41% to 3.4% for the fourth quarter.
"Margins are obviously not good," Pak said "There's a story behind that. I think they didn't really get the truck mix that they wanted."
GM's subsidiary for auto finance and mortgage lending,
, helped compensate for weakness in automotive margins and sales. GMAC's earnings rose 23% to $367 million, up from $298 million.
The company said it would be looking for a strong 2000 from its new line of full-size pickup trucks.
Pak said he is cautiously optimistic. "Inventory is high and market share low. Right now they have 74 days of advance supply in the car lines and sport utility vehicles. In general, you like to be in a situation where you think demand is increasing, so you're in a sweet spot of 60 or 70 days ahead."
GM was up 9/16, or 1%, to 82 1/16 in early trading Thursday. (GM closed up 3/4, or 0.92%, at 82 1/4.)