General Motors Profits Fall
Thursday, October 12th 2000, 12:00 am
By: News On 6
DETROIT (AP) â€” General Motors Corp. said Thursday its third quarter earnings fell 5.5 percent as losses in Europe more than offset higher North American profits.
The world's largest automaker earned $829 million, or $1.55 a share, in the July-September period compared to $877 million, or $1.33 a share, in 1999.
Profits per share increased as GM continued a stock buyback program, reducing the average number of shares outstanding compared with a year earlier.
The results were a penny a share higher than the average estimate from 18 Wall Street analysts of $1.54 a share, according to a survey by First Call/Thomson Financial.
Revenues totaled $42.6 billion, down slightly from last year's third quarter total of $42.8 billion.
Profit at GM's North American auto business rose 8 percent to $728 million from $671 million. GM president and chief executive G. Richard Wagoner Jr. said the company increased profits through reducing costs, even as incentives were up and production of high-profit trucks was down.
While U.S. auto sales have been running strong, automakers have had to increase incentives to keep customers coming into showrooms. Last week, GM announced a one-month incentive program offering no-interest loans with terms of up to five years on several models of cars and mid-size sport utility vehicles in a bid to reduce its inventories.
GM's European auto business reported a loss of $181 million for the quarter, compared to a profit of $32 million in the third quarter of 1999. GM said price pressures in Europe and the launch of a new version of the company's highest-volume car were responsible for the loss.
The company's Asia Pacific division reported a loss of $10 million, compared to a loss of $54 million in the same quarter a year ago. GM's Latin America/Africa/Mid-East business earned $31 million, reversing a loss of $36 million a year ago.
GM said its Hughes Electronics arm saw its losses more than double, from $30 million to $88 million, despite higher revenues. The company said it was still growing its DirecTV service, and losses increased because of investments in new technology.
GM has been considering several options for selling all or part of Hughes. Microsoft, Rupert Murdoch's News Corp., John Malone's Liberty Media Corp., the Walt Disney Co. and Viacom Inc. have been mentioned as possible bidders for DirecTV, should it become available
The automaker's other manufacturing divisions narrowed losses from $96 million to $57 million. Its finance arm, GMAC, reported a 2 percent increase in earnings, to $401 million.
For the first nine months of 2000, GM's profits totaled $4.3 billion, a 10 percent decline over the same period of 1999. That's despite a 6 percent increase in revenues to $138 billion.