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GM Expects to Beat Earnings Forecasts

January 11, 2002|MICHAEL ELLIS | REUTERS

DETROIT — General Motors Corp. said Thursday it is targeting earnings this year above Wall Street consensus forecasts, as money-losing rival Ford Motor Co. prepares to unveil deep cuts in jobs and production.

Detroit-based GM, the world's largest auto maker, said it expects to exceed analyst forecasts thanks to expected market-share gains around the world and continued cost-cutting, including job cuts in North America and Europe.

"We will drive for market-share growth," GM Vice Chairman Robert Lutz told Wall Street analysts. "We will pursue growth in share, while at the same time attempting to maximize profits."

The bullish forecast comes a day before No. 2 auto maker Ford was expected to unveil a massive restructuring plan including the shuttering of some North American vehicle-assembly plants and thousands of job cuts.

German competitor Daimler Chrysler also expects a rough 2002. Its shares were hit hard Thursday after the company told Wall Street analysts Wednesday it will have a "tough job" meeting 2002 earnings targets, and is still hopeful its Chrysler unit will return to break-even levels this year.

GM, a few years ago regarded as the laggard among the Big Three Detroit auto makers, is now the only one expected to post a profit for full-year 2001.

"They're back in the game," said David Cole, president of the Ann Arbor, Mich.-based industry consultants Center for Automotive Research, noting that GM has become a stronger competitor with strong products and improved quality.

As part of its cost-cutting efforts, GM has said it aims to cut its North American white-collar work force by about 5,670 jobs, or about 10%, this year. The auto maker is offering a retirement package to some salaried employees and will cut jobs through attrition and reduced numbers of contract workers.

GM said it was targeting earnings of $3 per share for 2002, excluding its money-losing Hughes Electronics Corp. unit. The forecast is above an analysts' consensus projection of $1.93, according to Thomson Financial/First Call. Estimates from 15 Wall Street analysts range from 50 cents to $3.97 for 2002.

GM shares closed down 17 cents at $50.07 on the New York Stock Exchange.

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