GM posts $15.5 billion loss

Even excluding charges, automaker loses far more than expected as vehicle sales tumble.

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By Steve Hargreaves, staff writer

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The Detroit automaker's desperate bid to stave off bankruptcy is the latest chapter in a steady slide that began more than 20 years ago.
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NEW YORK ( -- General Motors reported a huge second-quarter net loss Friday of $15.5 billion, after restructuring and other charges, as the automaker's run of troubles continued.

The automaker lost $27.33 per share in the quarter, compared to a profit of $784 million, or $1.37 per share, a year earlier.

Even factoring out those charges, GM posted a stunning $6.3 billion loss on operations. That works out to $11.21 per share, far above the $2.62-a-share loss projected by Thomson Reuters.

Last year, the company earned $1.3 billion on that basis, or $2.29 per share, as it attempted to turn around years of losses.

GM (GM, Fortune 500) stock fell 8% in NYSE trading.

The automaker posted revenue of $37.7 billion from auto operations, down from $45.8 billion a year ago.

Analysts polled by Thomson Reuters were expecting revenue of $44.6 billion.

"We knew what was coming with these results, and we knew what we needed to do to respond and react" said a GM executive on a conference call.

The lost revenue was likely due to a significant decline in vehicle sales. GM sold nearly 5% fewer vehicles this quarter than it did over the same time last year.

U.S. sales took the biggest hit, falling 21%, although foreign sales rose 7%.

In a press release, GM said its results were impacted by $9.1 billion of predominantly non-cash special items.

It named strikes, labor cutbacks, and actions to reduce vehicle output as main reasons for the loss.

"As our recent product, capacity and liquidity actions clearly demonstrate, we are reacting rapidly to the challenges facing the U.S. economy and auto market, and we continue to take the aggressive steps necessary to transform our U.S. operations," GM Chief Executive Rick Wagoner said in a statement.

"We have the right plan for GM, driven by great products, building strong brands, fuel-economy technology leadership and taking full advantage of global growth opportunities," he added.

GM has now lost money in four of the last five quarters.

The auto industry as a whole has struggled recently as high gas prices and a weak economy have kept customers at home.

Last week, Ford Motor Co. (F, Fortune 500) reported the largest quarterly loss in its 105-year history. On Thursday, Standard & Poor's Ratings Services cut its ratings for all three domestic automakers further into junk status.

GM is attempting to get back on its feet after striking key wage and healthcare deals with its labor force last fall.

But critics have said the recent steps GM has taken to right itself - which included cutting 6,100 jobs and reducing its vehicle output by 117,000 - are not bold enough. What the company really needs to do, they say, is eliminate dealerships, vehicle lines and even whole brands.

GM, long the world's largest automaker, was outsold by Toyota in the first six months of this year, and experts say the Japanese automaker could overtake GM in worldwide sales for all of 2008.  To top of page

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