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GM affirms 3Q target
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August 21, 2001: 5:18 p.m. ET
Will beat consensus EPS forecast; salaried staff cut will top 10% target
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NEW YORK (CNNfn) - General Motors Corp. said Tuesday that it is confident that it will be able to hit its internal third-quarter earnings target that is a bit better than Wall Street expectations, and said that it should keep production at previously announced levels the rest of the year.
GM (GM: Research, Estimates) said in a statement it is confident it will earn 83 cents a share in the third quarter, down substantially from the $1.55 a share it earned a year earlier, but better than the current consensus forecast of 81 cents a share from analysts surveyed by earnings tracker First Call.
The company said third quarter production will stay at the 1.23 million vehicle level it previously announced, though that is off of the 1.32 million vehicles made in the year-ago period. It said that fourth quarter production, due to be announced Sept. 4, would be in line with analysts' forecasts of a 1 to 3 percent decline from the 1.36 million vehicles made a year ago.
"GM has a high degree of confidence in the business despite the volatility in the marketplace and the intense competitive environment," said a statement from John Devine, its CFO. "GM's inventory levels came down significantly during the first half and are now at appropriate levels. This should allow us to maintain reasonably stable production rates for the balance of the year."
The announcement from the world's largest automaker came after three days of steep declines for auto stocks in the wake of Friday's announcement from No. 2 automaker Ford Motor Co. (F: Research, Estimates) that it would cut production levels and profit guidance in the face of soft demand for vehicles.
Ford also announced Friday a voluntary cut of up to 10 percent of its North American salaried work force. GM announced Tuesday that its own program to cut 10 percent of salaried and contract employees in North America would exceed that target initially announced in December.
As to the overall U.S. auto market, GM's statement said it is still expecting to see 16.8 million vehicles sold this year, and said that Tuesday's rate cut by the Federal Reserve should help support those sales.
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GM said its own U.S. sales in August would be off less than 10 percent from a year ago, better than the 10 to 15 percent decline in August sales forecast by Ford on Friday. GM has seen a 6.8 percent decline in year-to-date U.S. sales through July.
Shares of GM lost 30 cents to $55.70 in trading Tuesday ahead of the after-hours announcement, while Ford shares fell 30 cents to $20.10. 
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General Motors
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