Shares of the nation's largest automaker, General Motors Corp. (NYSE: GM), have been soaring in premarket despite posting a large first quarter loss, as the company surprised Wall Street by reporting a smaller than expected loss per share.
For the quarter, General Motors said it swung to a loss of $3.3 billion, hurt by continued weakness in U.S., waning demand for its sport utility vehicles, and a supplier strike. The company stated that the strike, which started two months ago at American Axle and Manufacturing Holdings Inc. (NYSE: AXL), came with charges that totaled $800 million, and slashed vehicles production by 100,000.
Weighed down by those costs, GM posted a net loss of $5.74 per share, compared with a profit of 11 cents a share a year-earlier. However, excluding one-time items, the automaker reported a loss of 62 cents per share. Going into today's earnings announcement, analysts had been expecting the company to show a much higher loss of $1.60 per share.
General Motors posted a decline for its first quarter revenue, which dropped to $42.7 billion from $43.4 billion a year earlier. The good news is that the company had a great performance in its markets outside the United States, with particular strength in China, Brazil, Russia and India. The bad news is that vehicle sales fell in North America, hurt by the current weak economy. Losses from for its remaining investment in finance company GMAC also dragged down GM's quarterly revenue numbers.
General Motors also slashed its U.S. sales outlook for the year on concerns about further challenging market conditions. On the other hand, GM's executive vice president and chief financial officer showed confidence about the a rebound in the second half of the year.The automaker' surprising earnings numbers were enough to impress investors who have pushed the stock up 4.95% so far.
Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.
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