GM's record loss of $39 billion is a stunner that has investors once again questioning whether the country's largest automaker is any closer to consistently turning a profit.
For what it's worth, I think GM will get there, and I'll explain why in a bit.
But first, I have to admit investors have every reason to be skeptical. This is the latest case of an obstacle weighing down General Motors. Two years ago it was the rising healthcare costs. In the last year, it's been the need to lower labor costs with the UAW. Now, it's a one-time, non-cash, tax-related charge of $38 Billion. Oh and guess what? The auto market and economy are soft for the immediate future. No wonder some investors are asking themselves when GM will consistently be back in the black.
I'm not sure when that day will be. I doubt it will happen before the second half of next year given the slow economy and auto sales. But I do see a GM that is in much better financial shape, and its auto business IS improving.
Yes, GM's auto operations in North America lost $247 Million last quarter. But worldwide, GM made $122 million. GM sales are soaring in Asia, Latin America, and eastern Europe. GM's "global vision" is starting to work. The question is whether investors can ride out another quarterly loss in hopes of cashing in on GM's potentially profitable future.