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GM Maintains Outlook for 3rd-Quarter Profit

August 22, 2001|ALISON FITZGERALD | BLOOMBERG NEWS

DETROIT — General Motors Corp. on Tuesday affirmed its third-quarter profit outlook and production for the year, four days after rival Ford Motor Co. lowered its earnings forecast.

Earnings are expected to be about 83 cents a share for the quarter and production is estimated at about 1.23 million units, the No. 1 auto maker said. Analysts forecast GM's earnings at 81 cents, according to Thomson Financial/First Call.

Fourth-quarter production is expected to be down as much as 3% from a year earlier, GM said.

Ford, second-largest auto maker, said Friday it will cut as many as 5,000 salaried jobs and expects earnings of about 70 cents a share this year, below analysts' estimate.

The prediction stung investors who had been reassured by stronger-than-expected first-half U.S. auto sales as the economy slowed. GM shares have fallen 11% in three sessions, while Ford dropped 14%.

"Given the volatility in the market, we thought we needed to reaffirm where we are," GM spokeswoman Toni Simonetti said. "The pricing environment is difficult, and we have to watch that. Everything else is fairly predictable."

Analyst Nicholas Lobaccaro of Lehman Bros. said in a research report Monday that General Motors might lower its earnings forecast because "GM is also vulnerable to the same factors" driving down Ford's earnings. Lobaccaro reduced his 2001 earnings estimate from $4.35 a share to $3.25 for this year and from $4 to $3 in 2002.

The announcement probably will help General Motors stock, said Prudential Securities analyst Michael Bruynesteyn, who rates General Motors stock a "hold."

GM's plan, announced in December, to cut more than 10% of salaried and contract workers is on track, with reductions coming through voluntary early retirement and attrition, Simonetti said.

GM produced 1.364 million vehicles in the year-earlier quarter.

GM's announcement sent its shares up $1.10 to $56.80 in extended trading. Shares had closed at $55.70, off 30 cents, on the New York Stock Exchange. Ford fell 30 cents to $20.10, also on the NYSE.

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