GM outlook disappoints, shares tumble
By Ben Klayman and Deepa Seetharaman
DETROIT (Reuters) - General Motors Co posted a lower third-quarter profit on losses in Europe and offered a disappointing outlook that raised doubts about the speed of its turnaround two years after emerging from bankruptcy.
GM vowed to slash costs to shore up margins and said it would consider closing plants in its sputtering European unit, but its fourth-quarter outlook disappointed investors and sent shares tumbling 11 percent on Wednesday.
The percentage drop was the largest one-day decline since the company's initial public stock offering in November 2010.
Worries about slowing growth in key markets like Brazil and the continued drag from Europe prompted questions about whether the top U.S. automaker had taken its foot off the pedal after a 2009 taxpayer-funded restructuring wiped away its debt.
Chief Executive Dan Akerson called the third-quarter profit of $1.7 billion "solid" but quickly added "solid isn't good enough," an unusually stark assessment from a company long-criticized for moving too slowly to admit mistakes and force changes.
GM executives conceded the automaker needed to follow Ford Motor Co in streamlining historically tangled operations. Under the slogan "One Ford," CEO Alan Mulally has pushed GM's smaller rival to unify its vehicle development and purchasing over the past five years.
"You just can't turn on a dime," said Mirko Mikelic, senior portfolio manager with Fifth Third Asset Management, who said GM's turnaround remained complicated by the U.S. Treasury's 27 percent ownership stake.
"I don't think the U.S. government wanted to see them do a scorched-earth policy -- go into bankruptcy and radically change everything -- because that would have had an impact not only on GM but their suppliers, and that would have hurt the overall industry," he said. Continued...