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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: porcupine --''''> who wrote (893)	10/14/1998 10:36:00 PM
From: porcupine --''''>	Respond to of 1722

[GM will soon resume $4 billion share buyback program -- CFO] "General Motors Posts Loss of $809 Million" By KEITH BRADSHER -- October 14, 1998 DETROIT -- General Motors Corp. lost $809 million in the third quarter, mainly because of a nearly eight-week-long strike that ended on July 29 and crippled GM's production in North America, the automaker announced Tuesday. GM's loss of $1.28 a diluted share was slightly better than analysts' expectations. The company's North American operations continued to cut costs aggressively, paying less for auto parts and making factories more efficient. But Tuesday's report also showed that the company had been discounting its vehicles heavily in North America while its foreign operations were beginning to suffer from economic troubles overseas. Auto analysts said that the strike at two GM auto parts factories in Flint had caused so much disruption that it was hard to draw firm conclusions from the quarter's results. "The best thing about the third quarter is it's over," said Michael Ward, an analyst at Paine Webber. "Going forward, the news should get more positive." GM said the strike cost it $1.2 billion in the third quarter, the same amount it lost to the strike during the second quarter. Michael Losh, GM's chief financial officer, said in a telephone interview that the $2.4 billion in after-tax losses from the strike should be pared to roughly $2 billion by the end of the year as factories continue to work overtime to make up lost production. GM earned $1.04 billion during the third quarter of 1997, or $1.34 a share, but those figures included aerospace operations that GM has since sold. Excluding the aerospace operations, the strike and a $271 million after-tax charge for the disposal of some auto parts factories, GM's profits fell 28.4 percent during the third quarter, to $697 million, compared with $973 million in the quarter a year earlier. GM's sales in the third quarter plunged to $34.42 billion, from $41.89 billion in the quarter a year earlier, partly because some operations were sold but mainly because of the strike. Losh said that with the third quarter behind it, GM was well positioned for the fourth quarter. The introductions of new pickup trucks in North America and the new Opel Astra sedan in Europe were expensive during the third quarter but should start helping the automaker's results, he said. While GM spent an unusually high average of $1,732 a vehicle in discounts in the North American market during the third quarter, that figure fell to $1,400 for sales at the end of September, Losh said. Full-sized pickup trucks require virtually no discounts to sell, and GM had very few of them until the end of the quarter because it was changing the design. The weakening of the dollar this month may also make it harder for foreign automakers to offer discounts, easing the pressure on GM to provide large discounts. "One of the things that ought to help us is the yen is not 135 or 145" to the dollar, Losh said. The dollar was trading at 119.15 yen late Tuesday in New York. Financial analysts generally accepted GM's predictions that with the strike more than two months in the past, discounts might dwindle. "Once you get your '98 models cleared out and your floor traffic back, then you can cut the incentives," said Greg Salchow, an auto analyst at Roney & Co., a brokerage house here. Investors had little reaction Tuesday to GM's results. Shares of GM fell 87.5 cents, to $51.0625, in a falling market. GM announced plans in August to sell or spin off a 20 percent stake in Delphi Automotive Systems, its huge auto parts subsidiary, early next year, and Losh reaffirmed those plans Tuesday. GM's longstanding intention to wait until next year may allow enough time for financial markets to settle down, he said. The strike pushed GM's cash reserves down to $11.5 billion on Sept. 30 from $14.6 billion a year earlier and $12.1 billion on June 30. Losh said that GM expected the reserves to rebound soon to the company's target of $13 billion. When that happens, GM will resume the $4 billion share buyback program that it announced in March and suspended last summer in response to the strike, he added. One of the sharpest tumbles in GM's earnings occurred in the unit handling automotive operations in Latin America, Africa and the Middle East. Mainly because of the high interest rates and weak economy in Brazil, previously one of GM's most profitable markets, the division reported a loss in the third quarter of $64 million after a $165 million after-tax profit a year earlier. GM automotive operations in Europe earned $50 million in the third quarter after losing $21 million in the quarter a year earlier. GM's tiny Asian automotive division made $2 million in profits in the last three months after losing $7 million in the third quarter of last year. General Motors Acceptance Corp., which makes car loans and leases, earned $313 million in the third quarter, virtually unchanged from a $312 million gain in the quarter a year earlier. Copyright 1998 The New York Times Company

To: porcupine --''''> who wrote (893)	10/15/1998 6:45:00 PM
From: Freedom Fighter	Read Replies (1) \| Respond to of 1722

>>[Can a 1/4 point rate cut restore restore a financial system to health via placebo effect? Would a 1/4 point rate cut in Germany have 10 times the curative effect as one in Brazil?]<< It depends on how great the excesses are and how much of the truth we are being told about the status of the daisy chain of trillions of dollars of derivatives. We know the excesses are the greatest of all time by simply observing that everything in sight is being bailed out because not doing so would melt down the system. Even the Fed admitted that in its defense of the LTC strongarm deal. And the BIS has said that we were on the edge of a total meltdown twice in the last year. My guess is that a placebo can't cure this one. It's going to take more than interest rate cuts also. It's going to take luck, a lot of lying, and possibly divine intervention.