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GM Posts Q3 Financial Results Ahead of IPO

GM has announced third quarter financial results today, a week before it will ask potential investors for a vote of confidence in the amount of US $13 billion to fund its return to public trading.

I know a great investment opportunity, and the new GM is just that,” GM chief executive Daniel Akerson said in a video presentation posted on the Internet last week. “We can make significant profit even in today’s difficult environment.

Reported net income was US $2.16 billion, in line with preliminary results given last week. Earnings before interest and taxes for the third quarter were US $2.28 billion, up from last quarter's US $2.03 billion. Revenue rose 36 percent to US $34.1 billion.

It’s a very strong quarter financially,” Dennis Virag, president of Automotive Consulting Group in Ann Arbor, Michigan, said in a telephone interview about preliminary results GM released last week. “They’ve taken the excess capacity out of the system and cut costs throughout the organization. Any gain in the overall market is going to be very positive for General Motors, and the market has turned around from 2009.

GM plans to raise as much as US $10.6 billion by selling 365 million shares at $26 to $29 each. The company will also offer about $3 billion of preferred shares that later will become common stock. The stock offering will reduce the US government's stake from 60.1% to about 40%. Based on the price range GM has set, the US administration could lose as much as $5.4 billion on the stock that will be sold off during the IPO. Whether it will lose money when the remaining 40 percent is auctioned off depends on the share price at that time.

Should the industry return to its annual sales peak of 17 million units by 2015, the carmaker's annual earnings could push north of $13 billion, according to GM CFO Chris Liddell. US light-vehicle sales peaked at 17.4 million in 2000.
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