General Motors posted better-than-expected results on strong overseas sales, despite a costly supplier strike, waning demand for its most profitable vehicles and charges related to struggling former subsidiaries.
GM also took a $1.45-billion charge for its remaining investment in finance company GMAC and a $731-million charge for its exposure to the bankruptcy of auto parts supplier and former subsidiary Delphi.
Weighed down by those charges, GM posted a net loss of $3.25 billion, or $5.74 per share, compared with a profit of $62 million, or 11 cents a share a year-earlier.
Revenue declined to $42.7 billion from $43.4 billion.
Excluding one-time items, GM reported a first-quarter loss of $350 million, or a 62 cents per share, a narrower loss than Wall Street had expected.
On average, analysts had expected GM to post a loss of $1.67 per share before items on revenue of $40.6 billion, according to Reuters Estimates.
CEO Rich Wagoner told CNBC that the company had to make a number of tough decisions to keep a lid on costs and get through the tight economy.
"We're going to have to ride through this tougher time here in North America, keep our inventories tight, and meanwhile keep driving in the rest of the world, where things were pretty positive," he said.
"Considering the fact that we cut inventories dramatically in the first quarter, year-over-year...I think it highlights that the things that we can do, we're doing a pretty good job of. We're going to have to keep pushing, because I don't see the market picking up significantly in the next quarter."
GM Chief Financial Officer Ray Young said analysts may have underestimated the strength of GM's sales from emerging markets and the progress it made in cutting costs in North America.
"The headline numbers don't look that great, but when you actually peel back the numbers ... I feel the first quarter is very encouraging," Young told reporters.
Shares rose 5 percent off the opening bell.
The stock had dropped nearly 15 percent since the start of the year amid mounting evidence of deepening difficulties for the No. 1 US automaker.
Some analysts noted that GM shares were due for a bounce at the first sign of good news in the automaker's quarterly results, due to a buildup in short positions, which are sell orders in expectations of a decline in the shares price.
Holders of such positions hope to buy back those positions at a lower price, sometimes leading to a rebound in share prices.
Young said GM was still forecasting a second-half recovery in US auto sales but now believed that the turnaround would be weaker than it had expected at the start of the year.
"We still believe there is going to be a second-half recovery, but probably not as robust as what we had thought at the beginning of the year," Young said.
Strike Costs Detailed
On a global basis, GM earned $392 million before taxes on its auto operations with earnings from Europe, Latin America and Asia combining to outstrip a $611 million loss in North America.
JP Morgan analyst Himanshu Patel said in a note for clients that after stripping out hedging related gains for GM "(the first quarter) was simply not as bad as feared."
GM has been pressured by a two-month United Auto Workers strike against Detroit-based American Axle & Manufacturing Holdings , a major supplier to GM.
GM said the strike had cost 100,000 units of production and depressed first-quarter results by about $800 million.
GM has shut down or partly idled about 30 plants in North America because of that strike, which has mainly affected production of slower-selling large SUVs and pickup trucks.
The UAW also has hit GM this month with a strike at a plant near Lansing, Mich. where it assembles faster-selling crossovers, which are smaller and more fuel-efficient SUVs, such as the Buick Enclave.
GM said this week it would cut planned production by 138,000 vehicles this year by eliminating shifts at four North American plants and laying off some 3,500 workers, roughly 4 percent of its hourly work force in the region.
In addition to the slower sales and work stoppages, GM has also struggled with the legacy of its two troubled former subsidiaries: Delphi and GMAC.
GMAC posted a first-quarter loss of $589 million from $305 million a year earlier and warned that it might not be profitable again until 2009 because of falling home prices and tight credit markets.
Young said GM wrote down the value of its investment in GMAC after concluding that US mortgage markets were unlikely to recover in the near term.
GM kept a 49-percent stake in GMAC after selling the rest to private equity firm Cerberus Capital Management in 2006.
GM cut its forecast for industry-wide auto sales to the mid- to high 15-million vehicle range for 2008 in reporting first-quarter results. The automaker had previously expected overall sales above 16 million units.
GM forecasts industry sales including both light vehicles and heavier work trucks and buses.
GM's global vehicle sales fell nearly 1 percent to 2.25 million vehicles in the first quarter, falling far behind rival Toyota Motor , which sold 2.41 million vehicles.
GM and Toyota had been roughly even in 2007 for the top spot among the world's automakers in sales volume.
-- Reuters contributed to this report.