Did Peter really rob from Paul regarding auto zero % interest programs a few months back:
General Motors Boosts Profit, Production Estimates
from Bloomberg
By Alison Fitzgerald
Detroit, Feb. 25 (Bloomberg) -- General Motors Corp., the largest automaker, boosted profit estimates for the first quarter and full year and increased production because U.S. sales are higher than expected.
First-quarter profit excluding the Hughes Electronics division and some expenses will be $1.20 a share, up from a forecast of $1. The full-year forecast was raised to $3.50 from $3, the carmaker said in a statement. The company also plans to sell $2.5 billion in convertible debt securities.
General Motors, under Chief Executive Officer Richard Wagoner, outpaced U.S. rivals last year by introducing sport- utility vehicles such as the TrailBlazer and offering no-interest loans. The company expects U.S. industrywide sales to reach 16 million vehicles for 2002, about 1 million more than forecast at the beginning of the year, as the economy recovers.
``We're using more cars,'' said Dan Poole, an analyst at National City Corp. in Cleveland, which owned 256,760 General Motors shares as of December. ``We have to get used to the notion of higher production rates.''
The Detroit-based company's shares rose $1.64 to $54.75 in late morning trading. Ford Motor Co. gained 30 cents to $14.88, while DaimlerChrysler AG climbed $1.60 to $39.48, on the prospect of higher U.S. auto sales than forecast.
General Motors also said it has $136.2 billion in assets in special purpose entities, providing additional disclosure after Enron Corp. said it had partnerships tied to company executives. The automaker said it uses partnerships in a manner ``consistent with conventional practices'' and no officers, directors or employees hold equity interest in the partnerships.
``It's just a way to get very cost-efficient financing,'' said spokeswoman Toni Simonetti.
Higher Forecast
The automaker increased first-quarter production by 20,000 vehicles to 1.34 million, a 10 percent increase from the year- earlier period. For the second quarter, General Motors expects to build 1.425 million vehicles, a 4 percent increase from the year- earlier quarter.
Analysts had anticipated higher production and profit than General Motors initially forecast, with some analysts already raising earnings estimates. The average analyst estimate is 87 cents a share, and with some as high as 96 cents, including a loss of 10 cents to 15 cents attributable to Hughes.
Automakers expected a decline in sales from last year's 17.2 million units -- the second-best year ever -- because high fourth- quarter demand generated by no-interest loans may have taken sales that normally would have come this year. The decline in January was less than forecast.
Profit Forecast
The General Motors estimates exclude costs for reorganizing its European business and possible costs of meeting new European laws requiring automakers to help dispose of used vehicles. The automaker earned 50 cents a share in the first quarter of 2001, excluding some costs and including a loss of 9 cents from Hughes.
Simonetti declined to give a net income forecast or to provide an estimate for the reorganization costs or other expenses.
For the year, General Motors earned $1.5 billion, or $3.23 a share, excluding some expenses and including a 41-cent loss from the Hughes Electronics division.
The company estimated the gain from the sale of its Hughes Electronics unit to Echostar Communication Corp. would be $14.4 billion, based on Echostar's closing share price on Dec. 31. That transaction still needs approval by federal regulators.
The proceeds from the sale of convertible debt securities will be used to rebuild the automaker's liquidity, reduce underfunded pension liability and fund post-retirement health-care obligations, GM said.
The company plans to strengthen its balance sheet by $10 billion this year, partly through the convertible offering, and by taking cash out of its General Motors Acceptance Corp. finance unit, the company said in the statement. General Motors said it hopes to boost annual profit to $10 a share by the middle of the decade.
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