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Is The Worst Yet To Come For GM?

General Motors logo
General Motors logo

As I wrapped up my vacation and heard that General Motors planned to report second quarter earnings on Friday, I started wondering, "Just how big will the loss be for the quarter?"

Surely, it won't come close to GM's quarterly loss in the third quarter last year totaling more than $38 Billion. But keep in mind, that number was almost entirely due to a non-cash accounting-related charge.

Friday, Wall Street analysts are expecting GM to lose $1.489 billion. If they are right, the loss will be just short of the $1.631 billion GM lost (excluding charges) in that woeful third quarter of 2007. But much has changed since then. And it's the reason many investors are worried about what GM will report Friday. Sales have plummeted, residuals on leases are in the tank, and the American Axle strike in April and May hit the company hard.

I fully expect GM to follow Ford's lead and announce billions in charges as the company continues to rapidly downsize and adjust its operations to a weakening auto market. So the headline number may be a whopper. Nowhere close to the $38.6 billion loss in the third quarter of last year, but big enough to get A LOT of attention. And believe me it will.

The investor may look past charges and write-offs, but to the average American, if they hear GM has lost 5, 10, 15 Billion dollars, they will once again ask, "Is this the worst we will see from this company?"

Saving GM
Whether you believe it or not, GM executives DO believe in the plan CEO Rick Wagoner has laid out for returning the company back to profitability. But how patient can investors be? And what does Wagoner say to those who think he's had enough time to try and straighten out the company?

CNBC Original Productions: Saving General Motors
CNBC Original Productions: Saving General Motors

We put that question to Wagoner as part of of one hour CNBC documentary "Saving GM", which airs next Wednesday at 9 PM Eastern. To his credit, Wagoner doesn't duck any questions, nor does he recoil when I preface a question in our interview by telling him, "Most other CEO's putting up the same performance would be out of a job by now...." How Wagoner handles the questions says a lot about who he is and why he's still in charge at GM. Tune in next Wednesday and judge for yourself.

Questions? Comments? BehindTheWheel@cnbc.com

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