w5.2 - Meghraj Patil MBA 6001 Instructor: John Halstead GMs...

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Meghraj Patil MBA 6001 Instructor: John Halstead GM’s Future: Executive Summary Is the worst over for General Motors? It’s hard to say worst over for GM, because results seem to have easily topped forecasts for the first quarter, with the troubled automaker posting a profit excluding special items rather than the loss Wall Street analysts had forecast. GM got a boost from improved pricing and strong sales for its new big SUVs in the quarter. While the company still won't give guidance about when it expects to return to the black, many analysts say things are turning around sooner rather than later. Of the 13 analysts with quarterly forecasts for the rest of this year, nine are forecasting profits for GM in the second and fourth quarters. The third quarter, when automakers shut plants to shift production to the new model year, typically is less profitable. In addition, 16 of the 17 analysts forecasting 2007 results see the company back in the black by next year, with a consensus forecast for profits of $1.85 a share. The group is looking for a loss of loss of only 36 cents a share for all of 2006, excluding one-time items, which itself would be a large improvement from the $5.99 a share GM lost on that basis in 2005. The SUVs could give GM a boost in revenue. Whenever car companies launch an all-new vehicle to market, they are pumping out vehicles from the plants to stock dealer inventories and give shoppers plenty of choice on the lot. Some of the advantages GM saw in the first quarter will be tough to repeat. First, it introduced a new line of large SUVs and saw strong sales. But the admitted such strength
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w5.2 - Meghraj Patil MBA 6001 Instructor: John Halstead GMs...

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