General Motors put out its earnings report today, and the news is not good at all:
NEW YORK (CNNMoney.com) – Just when it seemed things couldn’t get worse for General Motors Corp., they did, as the embattled automaker said Thursday it lost a total of $4.8 billion in just the last three months of 2005.
Including special items, the fourth-quarter net loss at GM (Research) equaled $8.45 a share, and brought the world’s largest automaker’s full-year loss to $8.6 billion, or $15.13 a share.
There’s more in this story from the Washington Post.
I’m sure that, by the end of the day the media will be playing Chicken Little with this one. Lou Dobbs will will calling for protectionism, and nobody will recognize the reason this is happening has nothing to do with competition from Japan and everything to do with the fact that GM is not making cars people want to buy and is tied down by union contracts that restrict its ability to compete. The first problem could be solved with a little hard work. The second ? Perhaps only a Chapter 11 filing.
On a related note, President Bush signals that he is decidedly opposed to the idea of bailing out Ford or GM like we did for Chrysler in the 80s.
NEW YORK — President Bush is offering no encouragement to any U.S. automobile companies that might be thinking about turning to the federal government for a financial bailout.
“I think it’s very important for the market to function,” he said in an interview in the Thursday editions of The Wall Street Journal.
He said companies need to manufacture “a product that’s relevant” and that his administration has discussed new fuel technologies with the nation’s top two auto makers.
“As these automobile manufacturers compete for market share and use technology to try to get consumers to buy their product, they also will be helping America become less dependent on foreign sources of oil,” Bush said.
And……
Together, the two companies plan to cut about 60,000 jobs over the next few years and there is concern on Wall Street that one or both could wind up seeking bankruptcy protection.
That, in turn, has raised the prospect of one or both seeking government assistance as Chrysler did in 1979 when it won $1.5 billion in loan guarantees.
“I have been very reluctant,” Bush said, cutting off his sentence. “I’m mindful of the past where at one point in time, a predecessor of mine was faced with that same dilemma. I would hope I wouldn’t be asked to make that decision.”
Well, at least there’s some good news.
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