GM changes its mind, posts Q1 profit
General Motors has revised its first quarter earnings statement to show a profit of $445 million, rather than the $323 million reported earlier this month. GM says the change is based on conversations the company had with SEC regulators regarding whether or not it could write off the settlement it made with blue collar retirees over health care. The charges will instead be broken out over seven years starting third quarter, when the changes take effect.
[Source: Reuters]
Reader Comments (Page 1 of 2)
Elliott 8:03AM (5/09/2006)
"rather than the $323 million reported earlier this month"
I think you want to add the word "loss".
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Richard Warren 8:16AM (5/09/2006)
How quickly things change, the stroke of a pen, the tap of a keyboard. Instant profit or instant loss.
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naif 9:02AM (5/09/2006)
makes me wonder what they need more, replace rick or get an accountant. how can anyone believe any numbers, good or bad that they give out.
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Steve C. 9:10AM (5/09/2006)
I'm beginning to wonder whether Ken Lay has been advising the GM guys on accounting practices.
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Warren 9:17AM (5/09/2006)
Why don't you idiots read the article and think about it with an open mind for once. It clearly states that the SEC REQUIRED GM to account for the health care deal in the first quarter as they originally reported.
"The SEC was requiring preposterous accounting treatment for this," Healy said, referring to the SEC's initial requirements asking GM to book the charges in the first quarter."
Furthermore, they told the public about it and said they may have to restate.....
"GM had cautioned investors last month that its first-quarter results could change as a result of discussions with the Securities and Exchange Commission over how to book charges related to money the company will contribute to a new trust for retiree health care."
Regardless, it doesn't change their operating performance.....
"It's not a good thing or a bad thing. It's an accounting thing," Argus Research analyst Kevin Tynan said of the revised results. "If you take out special charges, their operating performance is essentially the same."
How much more open and honest could you possibly be? The maniacal rantings I read on this site make me sick. Use your friggin' heads and think for once in your miserable lives.
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shu 9:25AM (5/09/2006)
Hey Warren, ever think of trying decaf?
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mickster 9:25AM (5/09/2006)
This is a legitimate restatement of earnings and GM was smart to go right to the SEC to find out the proper accounting rules.
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Richard Warren 10:03AM (5/09/2006)
Warren,
I did read the article---- Simply saying that a ruling=How quickly things change, the stroke of a pen, the tap of a keyboard. Instant profit or instant loss.
Agree with the Decafe
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Alex 10:39AM (5/09/2006)
I question whether tried to pull a fast one- The way the retiree health care savings are supposed to be charged against the balance sheet are pretty obvious. If the payments are being made over 7 years, the charges should be accounted for in the quarter they are spent.
This is company that has gotten into a dangerous pattern of accounting mistakes and restating earnings. Not good, not good at all.
I notice the stock has moved up a bit, and it boggles the mind. Investors need to be cautious with a company that does not offer earnings guidance, and goes back on their earnings once stated. In my view there stock should reflect a much lower price due to its unreliable earnings.
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Not another moron 10:46AM (5/09/2006)
I'm with Warren! And I don't need decaf either. Most of the responses posted on this site are obviously made by people who couldn't tell a debit from a credit, and who think that this type of change actually means something. It doesn't. Like any business analysis, you need to know a thing or two about THE charge itself, and you would know that this is nothing more than accounting for the same charge amount all at once, or spread over a number of accounting periods.
This helps, imo, though, because people may actually realize that GM can turn an operating profit, and will be stable and profitable again.
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Corey W. 10:47AM (5/09/2006)
Guys,
You know how "corporate" accounting works... As long as they're not trying to pull an Enron.
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John Smith 12:07PM (5/09/2006)
Profit is bad for GM, if they're not using it to build new plants in Mexico.
More money just further confuses those economically befuddled union workers once again.
GM needs to use every spare cent to:
1. Refine its vehicles.
2. OBLITERATE the UAW come next year. That outfit needs a FATAL blow.
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Jaimie B 12:24PM (5/09/2006)
GM's accounting and their vehicles have something in common - they're both so riddled with problems they're a joke.
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GM watch 12:35PM (5/09/2006)
John Smith you have more problems than the UAW. I really wish people on this Blog would keep their mouths shut about things which they do not have a clue, and that John Smith means YOU.
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GM watch 12:38PM (5/09/2006)
Jaimie B
You need to get a life. you should should recognize a joke, you see one everyday when you look into the mirror.
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GM watch 12:42PM (5/09/2006)
Corey W
You post senseless ramblings everyday, get a job and get off the computer. Or better still get a little fresh air, it will do wonders for that condiction you have, brain cramp.
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CANADIAN MADE 12:57PM (5/09/2006)
You gotta have parts,
Miles and miles and miles o' parts,
And if DELPHI has its way,
GM's profit won't stay,
Toyota and Ford could also hurt,
But it's GM who stands to lose their shirt,
BE-CAUSE...EVERYBODY SING...
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gwballin 12:57PM (5/09/2006)
The FASB and the IASB, trying to close the gap between international and U.S. accounting procedures through the Joint Conceptual Framework Project had this to say about the use of financial statements:
"The IASB framework assumes users ?have a reasonable knowledge of business and economic activities and accounting and a willingness to study the information with reasonable diligence.? FASB Concepts Statement 1, Objectives of Financial Reporting by Business Enterprises, says that and also says:
Financial information is a tool and, like most tools, cannot be of much direct help to those who are unable or unwilling to use it or who misuse it. Its use can be learned, however, and financial reporting should provide information that can be used by all?non-professionals as well as professionals?who are willing to learn to use it properly."
I say that to prove this point, for those that are capable of using the financial statements as intended, absolutely nothing has changed with the restatement. When GM was reporting a loss, the expense of the settlement was out in the open. Now, it is disclosed in the footnotes that the expense will be spread over a longer period of time. Those that are properly able to analysis the financials will realize that the net effect on GM has not changed, it is only a timing issue.
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CANADIAN MADE 1:02PM (5/09/2006)
You gotta have parts,
Miles and miles and miles o'parts,
And if DELPHI goes away,
GM's profit won't stay,
Toyota and Ford will also get hurt,
But as predicted GM will lose their shirt,
BE-CAUSE...EVERYBODY SING....
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Talis 2:09PM (5/09/2006)
I'm with Warren #5!!!! I didn?t even have my morning cup of coffee yet, and many of the posts here are GM hating for no reason, only that GM is a big company with a lot of spending overhead. Also Not another Moron #10 is right by pointing out that DEPT is different from CREDIT. Some of you guys need to take some business classes; for the rest of you, this is just an SEC report and is nothing to get worked up about. GM is doing well this year and everyone who works for GM should be proud of the massive turn around.
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