Posted on 11/06/2007 2:49:35 PM PST by BurbankKarl
General Motors Corp. said Tuesday it will book a $39 billion noncash charge in the third quarter when it announces earnings on Wednesday as it reduces certain net deferred tax assets to $0 due to an accounting rule.
The move is triggered as the company expects to lose money on an adjusted basis during the three-year period starting in 2005 and ending in 2007, meaning it has to make the adjustment in order to be in compliance with federal accounting rules.
The noncash charge promises to devastate GM's headline net earnings results during the third quarter. The charge will be partially offset by a positive gain related to the sale of Allison Transmission, which was closed in the third quarter. GM could realize a more than $5 billion gain thanks to the sale of that unit.
(Excerpt) Read more at online.wsj.com ...
How convenient when UAW bonuses are tied to booked profits.
GM is a corpse.
The charge will be a “below the line” item and as such should not impact any profit sharing scheme GM has with the union.
Down only about a buck in after-hours trade, from its $36.16 close, so anyone perched on a ledge can go back inside.
Also has no net effect on operating profits/losses or cash flow, which is important to note.
The “big” deal about this is that it indicates that management does not expect to earn enough in profit to use all those tax benefits before they expire.....
But any rational analyst knew that already... still, be prepared for a giant stock price drop...
You are correct, sir.
It's always amazing how the unwashed masses eat this stuff up, though... ;)
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