DETROIT — It’s hard to ignore the second largest quarterly loss in U.S. history. But General Motors’ worst-ever $39 billion loss on a charge involving unused tax credits was only one piece of dire news for the world’s largest car company.
GM is hemorrhaging money, particularly in North America, and the outlook for 2008 and beyond is bleak. A soft U.S. market, high gas prices, the housing slump and jittery consumers will hamper the automaker’s restructuring efforts, industry analysts said.
GM reported the latest loss Wednesday.
Its third-quarter loss of $39 billion was the second-worst quarterly net loss in U.S. corporate history under generally accepted accounting principles, said Howard Silverblatt, senior index analyst for Standard & Poor’s. The loss was exceeded only by AOL Time Warner’s $44.9 billion loss in the fourth quarter of 2002, he said.
GM attributed most of the third-quarter loss to a $38.6 billion noncash charge related to accumulated deferred tax credits in the U.S., Canada and Germany.
Reaction was swift. GM shares fell nearly 5 percent, or $1.67, to $34.48. S&P cut GM’s 12-month target price by $7 to $32, while Moody’s Investors Service downgraded its outlook on GM from positive to stable.
The pain was all the more acute with the announcement by Toyota on Wednesday that its profit for the fiscal second quarter rose 11 percent to a company-record $4 billion. Toyota and GM are vying for the title of world’s largest automaker by sales this year.
GM reported a net loss of $247 million in North America without the charge for the latest quarter. That compares with a net loss of $667 million in the year-ago period.
