GM is expected to report fourth-quarter earnings Thursday. Will it meet expectations for its first full-year profit since 2004?It's been a real American rags-to-riches story: With the help of a government bailout, automaker General Motors (GM) -- which descended into bankruptcy during a harrowing 2009 -- racked up solid profits in the first three quarters of 2010 and once again went public in November.

On Thursday, investors and taxpayers will get the latest snapshot of GM's health when the company reports earnings for the fourth quarter and full year. Analysts expect the carmaker to post its first full-year profit since 2004, raking in $5.3 billion, according to estimates compiled by Thomson One Analytics.

On a per-share basis, GM's full-year earnings are expected to reach $2.87 a share, according to a consensus estimate of 14 analysts compiled by Zacks.com. Those anticipated results compare to a loss of $4.3 billion during the second half of 2010, following GM's emergence from its controversial government-backed bankruptcy.

This week's earnings report will provide evidence that the plan worked, Aaron Bragman, an analyst with IHS Automotive, told the Detroit Free Press. GM has done quite well under the program, which has been shepherded along by new management team, Bragman said. "First and foremost, this has to be run like a profitable business."

New Model Costs Will Weigh on Results

GM has sought to keep expectations low for the quarter, which ended in December, after earning $4.2 billion in the first nine months of the year. It has warned that fourth-quarter results will be "significantly lower" than those recorded in previous quarters.

The automaker has cited costs related to the introduction of new models, including the compact Chevrolet Cruze and Volt plug-in hybrid as well as increased engineering expenses, for the anticipated lower earnings. GM also expects to take a $700 million charge to buy back preferred shares held by the U.S. Treasury.

The company said it expects to record positive earnings before charges related to interest and taxes, but it didn't say if it anticipates a net profit in the fourth quarter. Wall Street expects GM to report earnings of 47 cents a share on revenue of $34 billion.

After fellow automaker Ford Motor (F) missed analysts' fourth-quarter estimates last month, investors have been concerned that GM may disappoint, too. That may send its shares, which have traded in a narrow range since rejoining the stock market last fall, tumbling.

Growth and Challenges

GM ended Tuesday's trading down about 2% to $35.77 a share, as stocks on Wall Street lost ground overall on worries of higher oil prices and civil unrest in oil-rich Libya.

Growth prospects for GM are strongest in China, where it sold more cars last year than it did in the U.S., and in its U.S. truck operations, according to Trefis. The equity-forecasting firm has set a price target of $45 a share on GM stock, which is about 25% higher than its current share price.

Still, GM still faces challenges in streamlining its European Opel and Vauxhall operations to bring them back into profitability. To that end, the company is seeking to reduce plant capacity and labor costs, cut jobs and increase efficiency.



Increase your money and finance knowledge from home

Investing in Real Estate

Learn the basics of investing in real estate.

View Course »

Behavioral Finance

Why do investors make the decisions that they do?

View Course »

Add a Comment

*0 / 3000 Character Maximum

41 Comments

Filter by:
nolangallow

Cut they're workforce more? How does this bail out help tax payers again?

February 24 2011 at 10:27 AM Report abuse +1 rate up rate down Reply
rjackson2a

There is one thing you can be sure of. If GM and Chrysler had not been union companies, Obama would have let them go down the drain. And as long as there is a market for cars in this country, some one else would have taken there place.

February 24 2011 at 10:23 AM Report abuse +2 rate up rate down Reply
fredmoheit

As I understood, GM "paid" back the money they owed from an escrow account of taxpayers money......so how did the taxpayers get paid back? Many folks I know will never buy a GM product because of this taxpayers bailout and the fact that they should have been allowed to go bankrupt, just like every other business faced with a shortfall, but the folks understand it was Obama's decision to save the union who helped him into the white house. Buy Ford.

February 24 2011 at 10:06 AM Report abuse +3 rate up rate down Reply
Mike

How come there is no mention of the brand new plant that they biult guess where???? MEXICO!!!! how does that help the unions? Iv'e noticed since aol got mixed up with huffington the news went left no truth on this site...

February 24 2011 at 10:03 AM Report abuse +3 rate up rate down Reply
3 replies to Mike's comment
goatcars2

Rags to Riches story??? What planet am I on. First GM stockholders lose everything...Then they stiff all the Bondholders...Then Taxpayers give them 50 Billion to start over...Now all their debt is gone and they show a profit...Great, When do I get my $400,000 in GM bonds I'm holding???????????
Another liberal analyst buying into this BS.

February 24 2011 at 9:41 AM Report abuse +3 rate up rate down Reply
1 reply to goatcars2's comment
38314153drc

$400,000 in 'bad' bonds....gee, time to fire your broker!

February 24 2011 at 10:09 AM Report abuse rate up rate down Reply
DebraCTurner

I don't fully believe these reports. GM put themselves into the mess they were
in. I think their problems resulted from the CEOs and their inflated saleries & perks, the employees with their addictions, & the UAW & their bargaining. I had several relatives employed with GM. Mu uncle said where could he go make $25.00 an hour to do nothing? He was a relief man & at one point he said they gave him an indexing job & then decided it was too much. This was in the early 1970's. The unions were necessary at one time but when they started protecting the lazy & the addicted that was just too far. Some of those men would clock in then go across the street to one of the two bars. That is real productive.
The healthcare they had also, treatment for their addictions......it goes on & on.

February 24 2011 at 9:28 AM Report abuse +4 rate up rate down Reply
2 replies to DebraCTurner's comment
38314153drc

What your showing is mismanagement of available resources by the same company that 'brainwashes' the general public into thinking that unions are unnecessary in a collective bargaining era. In other words...take what we offer or get out!

February 24 2011 at 9:50 AM Report abuse +1 rate up rate down Reply
rjackson2a

For gods sakes Danny. Don't you know what an oversight is when you see one? Of course what I meant to say was that no warranty repairs can be made that are NOT authorized by the manufacture, and you knew that. Your response has now shown me though that you are looking for an argument rather than an intelligent discussion, so good bye.

February 24 2011 at 12:10 PM Report abuse +1 rate up rate down Reply
boot36boy

I'm one of the many people who were screwed by an inferior GM product, then left hanging by the dealer who didn't want to accept responsibility for that product. Tell me, should a brand new vehicle need 4 head gaskets in 150,000 miles? The first was at less than 40,000. It's fine and dandy to buy American, but if American made is crap, I for one don't have money to throw away. Head gasket replacement costs over $ 1,000.00 each time. I'll never buy another GM...even if they end up being the last car manufactured on the face of this planet.

February 24 2011 at 9:06 AM Report abuse +2 rate up rate down Reply
10 replies to boot36boy's comment
Michael

Jacked up reported "profits" before the public offering and then charged the big costs to the new stock holders for a big loss in the last quarter. Look for another loss in the first quarter of 2011.

February 24 2011 at 7:35 AM Report abuse +1 rate up rate down Reply
dglass4321

I don’t understand everyone patting GM on the back for screwing over their investors. If you or I as an individual declared bankruptcy and was no longer responsible for what you owed on your credit cards and other personal debt, we would have people look down on us for not being able to manage our finances. GM on the other hand, defaults on an obligation to investors (like me) and says our investments are now worthless and everyone applauds their financial savvy and wonderful recovery! What’s that all about? Personally, I don’t care if GM made a Lexus quality vehicle and sold it for under $10,000; I’ll never buy another GM product.

February 24 2011 at 6:59 AM Report abuse +3 rate up rate down Reply
renaldo1949

is it ok for all other car companies, foreign and domestic to get tax breaks and incentives of one kind or another?

February 23 2011 at 3:43 PM Report abuse +1 rate up rate down Reply
1 reply to renaldo1949's comment
38314153drc

Welcome to 'free' enterprise!

February 24 2011 at 9:56 AM Report abuse rate up rate down Reply