NEW YORK (CNN/Money) - General Motors Corp. reported improved first-quarter results Tuesday that easily beat Wall Street expectations, although the company warned it will have trouble meeting its earlier guidance for 2003 full-year results.

The world's largest automaker topped first-quarter results. GM's CFO John Devine talks about earnings, competitive industry and the economy. Play video (QuickTime, Real or Windows Media)

The world's largest automaker earned $978 million, or $1.81 a share, excluding special items but including the operating loss from Hughes Electronics (GMH: Research, Estimates), which GM agreed last week to sell to News Corp. (NWS: Research, Estimates). That compares with $645 million, or $1.29 a share, the company earned on the same basis a year earlier. Analysts surveyed by earnings tracker First Call had a consensus per share forecast of $1.54.

The company said it expects to earn at least $1.00 a share, excluding results from Hughes and any special items, in the second quarter. That's well below the first quarter EPS forecast of $1.46 a share, which unlike the GM guidance includes an expected loss from operations at Hughes.

GM also said while it expects to stay profitable in the second half of the year it no longer is certain that it can hit its EPS target of $5.00 on that basis for all 2003. First Call's forecast calls for 2003 EPS of $4.63 a share, down from $6.64 a share it earned in 2004, but that includes the operating loss from Hughes for the year.

"It's clear from the data we're getting the disadvantage of some stronger headwinds," GM Chief Financial Officer John Devine said in a conference call discussing results. "That's leading us to be a little more uncertain about making our $5 number the rest of the year." Devine would not give any new earnings target.

He said he's worried about the growing unemployment rate and weakening consumer spending. He also pointed out that the economy needs stimulus. "The fiscal stimulus package, the administration's looking at, we regard it as very important. Frankly we would like to see some help," he told CNNfn.

Shares of GM (GM: down $0.95 to $35.17, Research, Estimates), a component of the Dow Jones industrial average, were down about 2 percent Tuesday afternoon.

Revenue rose to $49.4 billion from $46.2 billion a year earlier, as the number of cars sold edged up to 2.1 million from 2.0 million a year earlier. The cost of incentives was about the same as in the fourth quarter, Devine said, though he admitted it was higher than a year earlier.

"We still think incentives are working for us. We still think zero percent [financing] works, particularly for GM," he said. "That said, this is a tougher environment."

GM saw a 10 percent gain in profit to $546 million from its global automotive operations, even though profits from its core North American auto unit fell 16 percent to $548 million. It blamed the decline in North American auto profits on intense pricing pressure, higher pension expenses, and currency exchange rate changes from a year earlier. The company admitted it was disappointed with the loss of North American market share to 26.1 percent from 28.0 percent a year earlier.

But a narrowing of loss in Europe and improved results in the Asian-Pacific region helped improve auto operations elsewhere in the world to only a $2 million loss, compared with a $158 million combined loss a year earlier. The company was also helped by record profits in its GMAC finance unit, which was spurred on by record performance at its mortgage operations.

Including special items, such as the gain from the sale of GM's defense business, GM posted first quarter net income of $1.5 billion, or $2.71 a share, up from $228 million, or 57 cents a share, a year earlier.