Analysis: GM's 1st quarter profit a good start
Tue, 18 May 2010 03:39:38 GMT —
General Motors cashed in for the first quarter of 2010, with an $865 million profit. The dynamics of the profit look good to analysts at Northwood University, such as Thomas Alexander, MBA.
It doesn TMt look like it TMs all in cost-cutting, Alexander said. Their revenues were up a bit. That TMs what you need to have earnings, he added.
Alexander did point out that GM still has more than $50 billion in government loans (mostly in stock) and that the government still owns 61 percent of the company. GM will have to maintain profitability across all four quarters in order to be valuable enough for the government to sell that stock back to investors.
In order for the taxpayer to get paid back in full, the entire company would have to be valued at $80 billion dollars in the stock market. For that type of evaluation, the stock market and private investors are going to demand that they see earnings going forward, he said.
GM TMs first-quarter gain comes in under Ford Motor Company TMs $2.1 billion profit for the same time frame. Ford executives pledged to be profitable all year. Alexander said if GM can match that effort, the future could be quite bright. Either way, he said GM will have to gain market share.