GM CEO: 'No Cash Impact' From Record Charge

General Motors CEO Rick Wagoner sees "tough circumstances" in the marketplace, but expects "no cash impact" from a massive charge that left his company with a record $39 billion third-quarter loss.

"It's not a disaster, to be honest, but it's obviously not at all robust," Wagoner said in an interview on CNBC. "We need to be ready to deal with that for a while."

General Motors Chairman and Chief Executive Rick Wagoner.
Paul Sancya
General Motors Chairman and Chief Executive Rick Wagoner.

The largest U.S. automaker posted a net loss of $39 billion, or $68.85 per share, compared with a loss of $147 million, or 26 cents per share a year earlier.

Total revenue fell to $43.8 billion from $48.9 billion a year earlier.

Excluding one-time items, GM reported a net loss of $1.6 billion, or $2.80 per share.

GM's shares fell 7% in premarket trading from Tuesday's close on the New York Stock Exchange.

Wagoner blamed "the deterioration of profitability at GMAC" for triggering the massive third-quarter charge related to unclaimed tax credits.

From that charge, Wagoner said he sees "no cash impact, and we can, if we generate profit in the future...fully utilize the credit, so I wouldn't read anything into it as to the prospects of the company."

Speaking as GM shares were selling sharply lower in European markets, he called the timing of the charge "ironic."

"We just announced what I think is a historic breakthrough with the [United Auto Workers] which is going to have a significant positive impact on our cash flow and our earning power," he said, admitting that because of the structured nature of the agreement, the "positive impact" will take a while to "kick in."

Even without the charge, GM earnings were far lower than analysts had expected, but Wagoner insisted it was "not a bad quarter from the automotive side."

He said improvemnent will depend on when the mortgage business gets better.

"When GMAC gets back to its traditional profit position, that helps," he said. "When we see some robustness in the US industry...we're going to have a great basis to grow from."

A Chevrolet dealership in Loveland, Colorado.
David Zalubowski
A Chevrolet dealership in Loveland, Colorado.

The automaker said that record one-time charge against deferred tax assets was triggered by its cumulative losses over three years and the risk of both weaker auto sales and GMAC results in coming quarters.

GM's results, even excluding the massive one-time charge, were weaker than analysts had forecast.

Wall Street analysts, on average, had forecast an adjusted quarterly loss of 36 cents per share, according to Reuters Estimates.

That shortfall partly reflected a loss at finance company and former GM subsidiary GMAC.

GMAC, in which GM retains 49-percent stake, posted a $1.6 billion third-quarter loss last week triggered by a fourth consecutive quarter of losses at its Residential Capital unit, the second-largest independent U.S. mortgage lender.

GM said its auto operations improved in the third quarter.

On a global basis, the company posted net income of $122 million from continuing operations in the quarter, compared with a loss of $455 million on the same basis a year earlier.

Those results excluded Allison Transmission, a GM unit the automaker spun off in August. GM realized a one-time gain of $5.4 billion from that sale in its third-quarter results.