GM bounces back into profit

General Motors Corp., the world's largest automaker, Wednesday it made a profit with its deferred fourth-quarter results. On account of improvement in its automotive business, the company reported a profit of $950 million, though it failed to hit estimates owing to the Mortgage loses.

As compared with a year earlier loss of $6.6 billion, or $11.63 per share, GM posted net income of $950 million, or $1.68 per share. Revenue was reported to be $51.2 billion compared with $51.7 billion a year ago. Excluding costs, GM earned $180 million, or 32 cents a share which was under 90 cents to what the analysts had estimated.

In almost three years GM had not seen a profit as big as this. The loses of more than $12 billion during 2005 and 2006 were conquered as Chief Executive Officer Rick Wagoner made large cuts in expenditure. The intended Jan. 30 release had been advanced by the automaker until today to restate five years of earnings because of reporting errors. So GM this time reaffirmed net earnings, going as back as 2002.

“Earnings were positive, but the falloff in GMAC combined with continued pressures in GM North America brought GM in well below consensus,” Lehman Brothers analyst Brian Johnson wrote in a report.

Yesterday, former subsidiary, General Motors Acceptance Corp., stated that its home mortgage unit lost $651 million in the fourth quarter. “The residential mortgage market has been a tough area over the last three, four, six months for GMAC,” chief executive Rick Wagoner said in an interview. “On the other hand, the rest of their business is pretty good.”

“We needed 2006 to be a big year, and it was” said Wagoner but added that nobody at GM is yet declaring victory, because a lot more work still needs to be done.