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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 (1573)	4/17/1999 12:30:00 AM
From: porcupine --''''>	Respond to of 1722

GM, Ford Post Sharply Higher Q1 Earnings By Todd Nissen -- Friday April 16 1:28 AM ET DETROIT (Reuters) - General Motors Corp. (NYSE:GM - news) and Ford Motor Co. (NYSE:F - news) reported sharply higher first-quarter profits Thursday as strong core North American auto sales offset weaker performances overseas. GM earned $2.1 billion, or $3.04 a fully diluted share, in the first quarter, topping the Wall Street consensus estimate of $2.88 as polled by First Call Corp. The earnings were up 31 percent from the January-March period last year. Cross-town rival Ford reported a 20-percent gain in first-quarter operating earnings to a record $1.81 billion or $1.46 per fully diluted share, beating First Call estimates of $1.39 per share. Investor reaction was mixed, shaving $3 off GM's stock to $86.75, while boosting Ford $0.625 to $63.312. Although GM's South American losses were less than expected, analysts voiced concern over Ford's Latin American and European results. ''GM has a decent story and they're going to do fine,'' said David Bradley, an analyst at J.P. Morgan. ''Ford is a little more of a question mark. They had very bad European earnings, but they explained it as many one-time items that won't recur in Europe.'' Excluding GM's Delphi Automotive Systems Corp. (NYSE:DPH - news) parts unit, which the automaker plans to completely spin off to shareholders as an independent company in May, GM earned a net $1.8 billion or $2.73 per share compared with net income of $1.4 billion or $1.96 in last year's first quarter. GM's consolidated net sales and revenues in the first quarter totaled $42.4 billion, up 6 percent from $40.0 billion in the first quarter of 1998. ''We're particularly pleased with the strong performance of GM North America and General Motors Acceptance Corporation (GMAC) in the first quarter of 1999,'' said GM Chairman and Chief Executive John Smith, Jr., in a statement. In North America, GM had first-quarter profits of $1.41 billion, up from $841 million. Europe had a profit of $174 million vs $99 million. Asia/Pacific, Latin America, Africa and the Middle East all posted losses. GM's hoard of cash, marketable securities and assets from its employee trust grew 23 percent to $16.2 billion compared with $13.1 billion at the end of the fourth quarter and $15.4 billion at the end of the first quarter last year. GM Chief Financial Officer Michael Losh told analysts GM will slow its stock repurchase program in the second quarter to build up its cash reserves ahead of the United Auto Workers contract expiration in September, analysts said. ''He wants to have a nice piggy bank in case relations with the UAW sour,'' said analyst Gary Lapidus of Sanford Bernstein. During the first quarter, GM said it repurchased about 5 million of its common shares worth $480 million, completing 45 percent of its recent $4 billion share repurchase program. Ford, the No. 2 automaker, said net earnings were $1.98 billion or $1.60 a share, down from last year's $17.65 billion or $14.23, which included a $15.9 billion one-time non-cash gain from the spin-off of its Associates First Capital unit. Ford's first quarter revenues rose to $37.89 billion from $36.58 billion. The company's results do not include results from Volvo Cars. Automotive operations, including a $165 million gain from the dissolution of its AutoEuropa joint venture with Volkswagen AG, earned $1.65 billion, a 34-percent gain from last year. North American automotive operations earned $1.59 billion, up 57 percent. Ford's South American loss widened to $165 million from $45 million a year ago. Europe had a profit of $165 million, but would have only broken even without the AutoEuropa gain. Last year Europe earned $230 million. Ford cut its total automotive costs from a year ago by $100 million during the quarter. Chief Financial Officer John Devine said cost-cutting efforts were held back by numerous expenses, but he said during a news briefing that Ford will hit its cost-cutting target of $1 billion for this year. Ford is less sure about South America. The company will miss its target of improving losses in South America because of the economic downturn in Brazil, the region's largest market. Also in the quarter, Ford added $2.2 billion to its cash pile from a year ago, finishing the quarter with $23.5 billion.