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GM 4Q profits sink
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January 16, 2002: 2:00 p.m. ET
No. 1 automaker's results hurt by financing deals but still beat Street.
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NEW YORK (CNN/Money) - General Motors Corp. profits tumbled 58 percent in the fourth quarter, but the results still topped Wall Street forecasts as zero-percent financing deals helped propel sales even as they cut into the automaker's bottom line.
For the quarter ended Dec. 31, the world's largest automaker said it earned $255 million, or 60 cents a share, down from $609 million, or $1.15 a share, a year earlier. Analysts on average anticipated a profit of 59 cents a share, according to earnings tracker First Call, but their forecasts stood at 54 cents a share before GM raised its earnings guidance late last week.
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John Devine, CFO of GM talks with CNNfn's Rhonda Schaffler about this quarter and beyond.
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The results include the company's estimates of the cost of the economic crisis in Argentine, where it has two auto plants. The company said the economic situation there cost it $97 million, or 14 cents a share.
GM (GM: up $0.02 to $49.98, Research, Estimates) stock was higher in early-afternoon trading.
Overall, fourth-quarter sales rose to $46 billion from $45 billion. But the company said annual North American vehicle sales sank 11 percent from a year earlier.
While its results are expected to be far better than forecasted losses at competitors Ford Motor Co. and the Chrysler Group unit of Daimler Chrysler AG, GM executives said the current outlook is requiring it to take some cost cutting moves that will hit its employees' pocketbooks.
It is eliminating profit-sharing payments to hourly workers in the United States as well as annual incentive awards for company executives. Enhanced variable pay for eligible U.S. and Canadian salaried employees also is being eliminated. The cuts come a week after GM executives announced it would offer a new early retirement plan to help it cut salaried and contract staff in North America by 10 percent.
"We're in good shape to meet the tough competitive challenges in the year ahead," CEO Rick Wagoner said in a statement. "As we continue to introduce more new models this year, and intensify our focus on efficiencies and cost reductions, we're well-positioned when the economy rebounds."
The company said it plans to introduce 40 new products between now and 2003.
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For the full year, GM earned $1.5 billion, or $3.23 a share, excluding special items. That's sharply lower than the $5 billion, or $8.58 a share, it earned in 2000.
Including special items, the company earned net income of $601 million, or $1.77 a share, compared with net income of $4.5 billion, or $6.68 a share, a year earlier.
Full-year sales fell to $177.3 billion from $183.3 billion. 
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