GM Reports $2.5Bln 3Q Net Loss With Cash Reserves Down By $6.9Bln

Detroit, MI (AHN) - General Motors (NYSE: GM) reported net loss of $2.5 billion in the third quarter of 2008 due to rapidly deteriorating market conditions, and spent around $6.9 billion in cash in the same quarter.

The company reported loss of $4.45 per share for the third quarter, compared to a net loss from continuing operations of $42.5 billion or $75.12 per share in the third quarter a year earlier, when the company took non-cash charge of $38.3 billion.

"The third quarter was especially challenging for the auto industry. Consumer spending, which represents close to 70 percent of the U.S. economy, fell dramatically, and the abrupt closure of credit markets created a downward spiral in vehicle sales," Rick Wagoner, Chairman and Chief Executive Officer, said in a statement on Friday.

He added, "The U.S. government's actions to help stabilize the credit markets and eventually ease the credit crunch are an essential first step to the economy's and the auto industry's recovery, but further strong action is required."

On an adjusted basis, the automaker reported a net loss of $4.2 billion or $7.35 per share, compared with a net loss of $1.6 billion or $2.86 per share in the same period last year.

The market analysts on Wall Street had expected the firm to post net loss of $3.94 per share.

The company's revenue for the quarter was $37.9 billion, down from $43.7 billion in the year-ago quarter, on sharp sales declines across the industry, instability in the credit markets and dramatic retraction in consumer demand, especially in North America and Europe.

GM's cash, and other assets amounted to $16.2 billion on September 30, 2008, down from $21.0 billion it had reported as of June 30, 2008, reflecting negative adjusted operating cash flow of $6.9 billion in the third quarter 2008.

The company recorded losses in GM North America driven largely by the U.S. industry sales declined by 19 percent in the quarter. GM sold 2.1 million vehicles worldwide in the third quarter, down 11 percent year over year.

GM expects operating cash flow in the fourth quarter to be much better compared to the third quarter, and more consistent with the first half of the year.

Shares of the company declined by more than 14 percent to $4.13 per share in New York Stock Exchange composite trading on Friday. The stock of the automaker has plunged by 81 percent through yesterday.