They don’t call it Government Motors for nothing. In what has to be the most politically-motivated earning report in U. S. history GM (NYSE:GM) announced on Thursday that it made $7.6 billion in 2011. This is a record blasting the one set in 1997 during the height of the tech bubble where the then private GM made $6.7 billion.
The problem I have with this is that in every way that matters GM’s sales were down in 2011. Cost reductions in the 4th Quarter were, according to CEO Dan Akerson, accounted for $500 million. Even multiplied through the entire year that only accounts for $2 billion.
The money they are making comes squarely from the fact that they no longer have to pay the bondholders who got stiffed when President Obama nationalized GM and handed ownership to the UAW. All of whom are going to get $7000 profit-sharing checks as a result.
Add to that the biblical level of channel-stuffing GM has been engaging in all year, with 626,000 cars delivered into admittedly falling sales figures in every market around the world and it’s pretty obvious that this is still nothing more than one of the great thefts of all time being paraded around for political gains.
Stockpiles of unsold cars is growing. Money is being lost in Europe and South America, profits are weak in Asia but somehow they made more than $7 billion on North American sales that fell to an historical low of 12.8 million vehicles. So, slower sales, lower margins on fewer vehicles sold and material losses in major markets but yet we have a record profit. With the S&P surging from the liquidity nozzle open full blast how much do you want to bet GM’s stock price will be high enough for the Obama administration to declare the government made a profit on GM by November’s election?
$53 is the magic number folks.
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