DETROIT - General Motors Corp. posted a company record US$39-billion loss in the third quarter, as a charge involving unused tax credits brought an abrupt end to string of three profitable quarters for America's largest automaker.
The loss reported Wednesday was one of the biggest quarterly corporate deficits ever and it sent GM's shares down more than eight per cent in premarket trading.
The loss was attributed to a US$38.6-billion noncash charge largely related to establishing a valuation allowance against deferred tax assets in the U.S., Canada and Germany, as well as mortgage losses at GM's former financial arm, GMAC Financial Services.
Accounting rules require that companies expecting to keep losing money cannot keep carrying deferred tax credits indefinitely and must write down the value of these benefits.
The net loss amounted to US$68.85 per share, compared with a net loss of $147 million, or 26 cents per share, in the third quarter of last year.
The results included a US$3.5-billion after-tax gain on the $5.4-billion sale of Allison Transmission in August.
Without special items, the company reported a loss of US$1.6 billion, or $2.80 per share.
GM had record third-quarter automotive revenue of US$43.1 billion and record global sales volume of 2.39 million cars and trucks.
But it continued to lose money in its home market. It reported a net loss from continuing operations in North America of US$38.2 billion for the quarter including the noncash charge. That compares with a net loss of $667 million in the year-ago period.
Without the charge, the company's North American loss was uS$247 million in the third quarter of 2007.
"We continue to implement the key elements of our North America turnaround strategy, and these initiatives are driving steady improvement in our financial results, despite challenging North America market conditions,'' chairman and CEO Rick Wagoner stated.
The huge charge, announced after financial markets closed Tuesday, surprised Wall Street analysts who had expected a relatively small loss excluding special items. Seventeen analysts polled by Thomson Financial expected GM to lose 25 cents per share excluding one-time items.
