When General Motors Corp. (NYSE: GM) reports quarterly earnings tomorrow, the Detroit automaker is expected to post a steep loss in profit due to sales of SUVs and large trucks dropping off a cliff. Gas prices have increased sharply and have caught GM off-guard as its margin-heavy SUV segment has been hit hard. The automaker has not shifted its product mix fast enough to compensate.

Curiously though, investor Kirk Kerkorian planted more seeds in the auto industry yesterday by increasing his stake in rival Ford Motor Co. (NYSE: F), upping his ownership of the company to 5.7% after Ford reported a surprising $100 million profit late last week. Kerkorian invested in GM a few years ago, but dumped his shares after GM rebuffed efforts to become a partner with France's Renault SA. Why would Kerkorian re-enter the auto market after years of turbulence and the highest gas prices in a generation, even with Ford's recent profit?

Kerkorian may like what he sees in Ford CEO Alan Mulally. Mulally has said that Ford is re-sizing its capacity output to fit market conditions in terms of demand. This includes production capacity as well as product mix, which is the flexible golden ticket any automaker needs in a world of constantly changing variables. GM just hasn't gotten there, and it's hard to see if it will. GM lost $39 billion, although that amount was mostly due to tax changes not bad decision making. Will Kerkorian have success with Ford as his renewed interest in the auto sector picks back up? Ford will need it, as one quarter doesn't make a turnaround.

TheStreet.com's Jim Cramer says until we have some failures, he doesn't share the pervasive gloomy outlook.

Where are all the bank failures? When is a Freescale (NYSE: FSL) (Cramer's Take) or an Outback going to go under? How can Cerberus put on such a happy face? Why don't some newspaper or radio station companies fail?

As I read the article on Goldman Sachs (NYSE: GS) (Cramer's Take) today, I am struck by its sheer negativity. The Journal article makes it sound like Goldman is sitting on a pile of huge losses, paper that's never going to sell.

But I have to remind these naysayers that this is corporate debt, and corporate debt -- unlike so much of the housing debt of 2005-2007 -- is actually based on something, some standards, that actually might get it through.

Chrysler Corp., owned by private equity firm Cerberus Capital, has said what many auto industry watchers have suspected for a while. It's "operationally bankrupt," according to Chrysler boss Robert Nardelli (who left Home Depot this year after compensation padding during HD's poor performance). Nardelli walked into a nightmare, which was fitting since he left one company in his messy wake and joined another that was already in progress. How fitting.

Anyway, Chrysler, who is selling assets and trying to reorganize into something recognizable as an auto manufacturer, is apparently running out of cash. When Nardelli was asked point-blank if Chrysler was bankrupt, he answered slyly with "Technically, no. Operationally, yes. The only thing that keeps us from going into bankruptcy is the $10 billion investors entrusted us with." Thank goodness for Cerberus, eh?

Chrysler is trying to raise capital by selling land, older factories and other tangible assets (probably at a loss to book value), but with Cerberus now being exposed to the effects of the subprime mortage industry's implosion with its ownership of GMAC (bought from General Motors for $12 billion), it can't just prop up Chrysler without seeing the company shed itself of useless assets as quickly as possible. Would you buy a Chrysler vehicle with all this uncertainty? If customers start using that in their decision-making process, the world of hurt could get even worse.

The Associated Press reports that Cerberus Capital Management, the hedge fund, has decided to abandon its deal to purchase the mortgage business of H&R Block (NYSE: HRB). H&R Block's mortgage business, which has stopped accepting new mortgage applications, said it will lay off about 620 employees, close three offices and take a $75 million restructuring charge as it shuts down lending at Option One Mortgage Corp. (OOMC).

Why did Cerberus back out of the deal? The deal was struck in April, and since then the mortgage market has had some big downs. While Cerberus and H&R Block tried to renegotiate the agreement regarding Option One, they could not come to terms, announcing the termination was ''fully amicable." OOMC will honor $30 million worth of existing commitments.

The market is not happy with this announcement, sending H&R Block stock down 5.6% in premarket. It makes me wonder how much Cerberus -- which is already neck deep in mortgage problems with its GMAC ResCap investment -- must be thinking about the prospects for the mortgage industry. I would guess that the more it's learned, the less it likes.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

The Wall Street Journal is reporting that the private equity firm Cerberus has won the bidding for Chrysler. DaimlerChrysler (NYSE: DCX), which will probably change its name, will hold a small stake in the new holding company. Cerberus bought the majority of GMAC from General Motors (NYSE: GM) last year.

Aside from what Cerberus pays for the U.S. car company, which may be very little, the key to the transaction will be that Daimler will move the $18 billion of Chrysler pension and benefits obligations off of its books.

The UAW is bound to try to derail the deal. They favor having Daimler keep Chrysler or sell it to Canadian car parts company Magna International (NYSE: MGA). In either case, the union believed it could hold on to more jobs. The UAW may now be faced with trying to block the deal at the Daimler supervisory board level, or threaten to strike in the face of the deal. A work stoppage could badly damage Chrysler's already troubled efforts to turn around it sinking U.S. sales.

Cerberus may have the money, but the union holds most of the cards.

Douglas A. McIntyre is a partner at 24/7 Wall St.

General Motors Corp. (NYSE:GM) reported this morning before the market open that it actually made a small profit in its last quarter (a reverse from the year-ago period), but still missed analyst forecasts. What this will do to GM shares is something we will see this morning. GM said that there was a large improvement in its core marketplace -- the North American market -- but that the subprime lending mess was hurting its financial arm, GMAC. Here we have a red flag, albeit not a surprising one.

GMAC has been hailed as the savior of GM in many past years as the company continuously lost huge amounts of cash from its automotive unit but made huge amounts of cash from its finance arm (GMAC). GMAC lends money for everything from car loans to full mortgages, so when these overextended mortgage loans like ARMs and interest-only loans became the lend du-jour of the day, of course GMAC did not want to miss out on that lucrative little profit center. The thing is, the in-progress subprime lending implosion will hurt it along with every other lender that was short-sighted into short-term profits at the expense of the financially ignorant consumer.

GMAC is now feeling the heat, though, just as GM's auto operations are staging a stunning comeback from the days of SUV craziness that was reigned in by rising gas prices. In a fast-moving reversal of fortune, GM now has to deal with a steadier auto operations unit to fight back at Toyota Motor Corp. (NYSE:TM) with problems in its finance arm at the same time. This company just can't get a break, but it just asked for this one. GM's net income in the latest quarter of $950 million, or $1.68 per share, was helped by the sale of 51% of its GMAC finance arm. Excluding the sale, EPS came in at $0.32 or $180 million for the quarter -- but analysts were expecting $1.19 per share. To CEO Rick Wagoner: don't let any black cats cross your path soon.

With stunning swiftness, the damage from the collapse of the subprime mortgage market is bleeding out to other parts of the economy. And that damage will explode on Monday as investors continue to flee the sector.

How so? Because late Friday afternoon, according to the Wall Street Journal [subscription required] two subprime lenders dropped several bombshells that have left them fighting for their lives:

• New Century Financial Corp. (NYSE:NEW), one of the largest subprime lenders, is facing a federal criminal inquiry into its accounting and trading in its securities. Furthermore, if NEW's lenders don't let it off the hook for meeting the terms of its lending contracts or it does not find new lenders, NEW stated that its auditors are likely to warn of "substantial doubt" over its ability to remain in business. Translation: NEW could go bankrupt very soon.
• Fremont General Corp. (NYSE:FMT) will stop making subprime residential loans and is negotiating to sell that business.

As GM still has not set a date on when it will release its Q4 financial results, at least the world's largest automaker (for now) can talk about monthly sales figures, yes?

General Motors is scheduled to have a conference here in a few minutes to speak about its February sales figures for the U.S. market along with talks on the production of its various vehicle lines and ending with a Q&A session from the investor community - -mostly analysts.

With that said, we always want to give our readers the best and most real-time information when it comes to these types of events, so the below will be a liveblog -- in real time -- of the conference call. Please use the "Refresh" button in your web browser to see updates every few minutes to this blog entry. All times below are in EST as well. Here we go!

1:45pm -- the sales and production numbers were just released before the actual conference call starts. Get the lowdown on the numbers before the actual discussion starts by clicking here.

GMAC, the financing arm of General Motors Corporation (NYSE:GM), has announced a tender offer to purchase 30% of its outstanding deferred interest debentures. The bonds in question include those due Dec. 1, 2012 and June 15, 2015, and the tender offer will expire Oct 12. The offer includes an early tender premium of $200 for every $10,000 of accreted value tendered.

This news comes along with indications that GM's debt is rallying, and we may see far more debt on the motor company's books in the coming months. Could GMAC be returning to unsecured markets? That's great news for shareholders, and GE's stock is, indeed, within a few cents of its 52-week high, at $33.18 at last check.

With General Motors continuing to see pressure from just about every possible angle -- shareholders, customers, unions, employees, etc. -- here's another: The blogosphere. If any entity should realize how transforming communications with the outside world could help the company, it's GM. However, as we'll explore below, GM seems to have a few different faces on right now regarding blogging.

Our friends over at Autoblog have documented the fierce battle of wits between Thomas Friedman of the New York Times and the automaker itself. There's no denying the facts --GM, for all its (former) glory, sells more vehicles that are classified as gas guzzlers than any automobile manufacturer on the face of the planet. Yet, as BusinessWeek's Blogspotting notes,  the company chooses to recite such insidious spin like this -- it has grouped the Hummer in a group chosen for "outstanding fuel economy and great consumer appeal." Excuse me? (immense laughter). Ok, I'm all better now.

Since the Hummer H1 has now been discontinued by the Detroit behemoth, just what exactly are the PR folks at GM doing these days? Playing the Jeckyl and Hyde? If GM learns anything soon, it's that bloggers will always take a company to task for old-style corporate spin. Marketing and PR is changing globally due to the unbiased insight of the blogosphere and the more companies recognize this early, the better they can adapt to this changing world. The informed consumer is now in charge.