General Motors Rebounds According to Annual Profit Report


Thursday, February 24th, 2011
News

General Motors has failed to post a profit since 2004, but today that trend has changed. The report released by the automaker indicates the company made $4.7 billion last year, in comparison to a $21 billion loss by the contemporary GM and prior to bankruptcy in 2009.

GM’s chief executive, Dan Akerson, indicated that the past year should be taken as a step in the right direction as the company has build solid grounding to move forward on. In addition, the company has posted for the first time since 2004, four consecutive profitable quarters.

As a result, GM is providing $4,300 bonuses to nearly 45,000 union workers for their efforts this past year. Due to the company filing for bankruptcy in 2009 and the subsequent government bailout that ensued, the company has been afforded the opportunity to restructure and cut its debt, decrease health expenditures, renegotiate union contracts, trim the fat off the company by closing superfluous factories, and cut manufacturing costs substantially.

However, because the government still owns roughly 27 percent of GM, the major shareholders of the company are considered the American taxpayers. Thus, the statement made by GM’s Dan Akerson, are doubly true; while this was certainly a good start for GM getting back on track as an engine of American auto manufacturing, it surely does have a long way to go.

GM intends to strengthen its presence in emerging market countries such as China and Brazil. The company is putting emphasis on technological innovation as their means to bolstering profits. Analysts from Barclays Capital have indicated that the new vehicle launches have cut into profits this year, but projected that the stock could reach $48. The stock currently trades at $35.

Sources:

http://seattletimes.nwsource.com/html/businesstechnology/2014325294_gmearns25.html

http://www.latimes.com/business/la-fi-autos-gm-profit-20110211,0,4846220.story

http://www.businessweek.com/ap/financialnews/D9LJBKH00.htm

 



Article by Andrew Timm

The views expressed are the subjective opinion of the article's author and not of FinancialAdvisory.com



Tags: automakers , general motors , rebound

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