GM predicts bright Q3 results, gears up for IPO

The earnings for the third quarter, which will be announced sometime next week, will only strengthen company's claims that it is coming out of financial troubles after government-funded restructuring last year.

GM has been successful in earning $2.2 million in the first half this year after it introduced cuts in lesser selling brands and offered new models of its popular automobiles.

The company is also taking steps to reduce its debts. Just last month it had announced moves aimed at reducing its liability towards its pension plans.

The IPO is expected to raise $10 million for the company and will allow the largest partner in the company, the U.S. government, to reduce its stake from 61 percent to 40 percent.

Good results expected for third quarter
GM stated that its net income is expected to remain somewhere between $1.9 billion and $2.1 billion and the revenues could reach $34 billion.

The Chief Financial Officer Chris Liddell said that the company has given successful and profitable results in the first year after bankruptcy and will continue to do so but most importantly it will concentrate on improving quality of its vehicles.

IPO expected on Nov 18
The initial public offer of 360 million shares or a quarter of the company’s common stock is expected on Nov.18. The four owners of the company are the U.S. government, the governments of Canada and Ontario and a Union Health care trust.

The shares are expected to priced between $26 and $29 per share.

The IPO is expected to raise $10 million for the company and will allow the largest partner in the company, the U.S. government, to reduce its stake from 61 percent to 40 percent.

The reduced stake will help the company shed the image of being a government owned company. Americans always resented the bailout of the company with tax payers’ funds.

Financial experts hopeful
Guy Lebas of Janney Capital Markets predicted that there are 50 percent chances of the government recovering its investment and losses, and if it incurs loss, it will be relatively small.

The U.S. government will earn nearly $7 billion and the other partners will receive nearly $3 billion if the stocks sell between the expected price of $26 and $29 per share.

GM will still owe the government $33 billion after the IPO. The government plans to recover this amount by a number of follow up sales. It is possible within the next three years if the company performs exceptionally well.