NEW YORK (CNN/Money) -
General Motors Corp. posted flat third-quarter earnings Thursday that fell well short of Wall Street forecast and cut its earnings outlook for all of 2004 -- news that sent its stock tumbling.
The world's biggest automaker said it earned $440 million, or 78 cents a share, little changed from the $448 million, or 80 cents a share, it earned from continuing operations a year earlier. Analysts surveyed by earnings tracker First Call had forecast profits of 96 cents a share.
The automaker, which earlier Thursday set plans to cut up to 12,000 jobs in Europe to stem losses there, said it now expects full-year earnings of $6 to $6.50 a share, excluding special items, down from its earlier guidance of about $7 a share. Analysts were at $7.05 a share for the full year, on average.
GM (down $2.05 to $39.25, Research) stock, one of 30 in the Dow Jones industrial average, sank about 5 percent at midday.
CEO Rick Wagoner called the results disappointing, and cited intense competition and price-cutting in most of the company's markets.
"We've got to move more quickly in addressing these challenging, chronic structural-cost issues," Wagoner said in a statement.
The company's core automotive operations lost $130 million in the third quarter, a big swing from profits of $34 million a year earlier.
Losses in the auto business were led by North American auto operations, the company's biggest unit, which lost $22 million versus profits of $128 million a year earlier. It marked the first time in nine years that GM lost money in its North American auto operations, excluding special items or strikes.
Company executives pointed to a number of factors for the loss, including price cutting as GM sought to move out remaining 2004 models, a weaker mix with higher-priced, higher-profit vehicles making up a smaller portion of sales, and continued increases in health care costs.
Losses in Europe
While its auto operations saw improvements in its Latin America/Africa/Mid-East division, losses soared at its European operations to $236 million compared with a loss of $152 million a year earlier.
On a conference call Thursday morning, Wagoner said GM cut its guidance due to worse-than-expected losses in Europe. He and CFO John Devine said the cost cuts announced Thursday in Europe are only the first steps to stem losses there.
"There are things we can do. We did one of those today. Is that enough long term? Absolutely not," said Devine.
Profits fell in its Asia-Pacific unit to $101 million from $162 million a year earlier. The region includes China, which had been a bright spot for the company.
Wagoner said that growth of GM sales has leveled off in recent months as the Chinese government took steps to slow the nation's overall economic growth. But he and Devine insisted there was no need to cut back GM's aggressive expansion plans for China.
"We still believe in growth of the market. We still believe we're going to need our capacity," said Devine. "This is still a very important opportunity for the company and we don't want to be slow."
GM's finance arm, GM Acceptance Corp., saw a slight increase in operating profit in the period to $656 million, up from $630 million a year earlier.
Overall revenue increased to $44.9 billion from $43.5 billion a year earlier. Revenue from its North American auto unit slipped to $26.3 billion from $26.8 billion, even as the number of vehicles sold was essentially flat.
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