General Motors today posted a $2 billion third-quarter profit off revenue of $34.1 billion in its last financial report before its planned Nov. 18 return to the stock market.
GM previously said it would report a $1.9 billion to $2.1 billion gain for the quarter and promised its first full-year profit since 2004.
Through its quarterly earnings, GM’s third in a row, the company is seeking to convince investors it has eliminated the problems that led to four-straight annual losses totaling $82 billion before its 2009 bankruptcy. GM restructured on $50 billion in federal aid, and the stock sale will allow taxpayers to start recouping the $40 billion that was converted into a 61% stake in GM.
“Eighteen months ago, nobody expected any taxpayer money to get paid back,” said Rebecca Lindland, an analyst with IHS Automotive.
Well, that's what you get for listening to the Republicans. They were wrong, wrong, wrong. The hopes are now that the taxpayers will be paid back in full by the time this is over.
The automaker has said annual profits will continue. Chief Financial Officer Chris Liddell said last week in an online investor video GM will be able to make $11 billion to $13 billion before interest and taxes in a moderate sales year and $17 billion to $19 billion when sales are at their peak.
That’s largely because GM’s bankruptcy restructuring lowered its break even from at least 15.5 million in U.S. sales to sales of 10.5 million to 11 million vehicles, Liddell said. U.S. light-vehicle sales totaled 10.4 million in 2009 but were often in the 16 million range before the recession.
In the initial public offering next week, the U.S. Treasury is selling about a third of its 61% equity stake in GM at a loss. The government is hoping the stock’s value rises enough in the future to allow taxpayers to break even on the total investment when it sells the rest of its shares.
Are we counting the cost of the potential loss of a million jobs nationwide, had the Republicans let the domestic auto industry completely collapse? Are we counting the cost of the state of Michigan being "insolvent", and whatever financial horror that would entail? Are we adding those costs to the taxpayer ledger? No, unfortunately not. But when you add those factors in, we are going to more than break-even on the taxpayer's dime - we are going to thrive.
Assuming we can keep the Republicans from crashing the economy again, that is. Pretty big assumption to make, given their penchant for destruction, but you always have to hope for the best.