For years it seems the only profitable part of GM's portfolio has been its lending arm, GMAC. Now it looks like the General is losing the battle on that front as well. While the company has managed to pare its losses on the automotive side through cost cutting (read: eliminating jobs, not actually selling more cars), it is now taking a hit from the deflating housing bubble.
GM, which sold a majority stake in GMAC last year, realized a $115 million loss from the 49-percent share it still holds.
On Wednesday, GMAC posted a first-quarter loss of $305 million as pressure in the U.S. mortgage market forced it to take charges at its housing finance unit.
"I think investors understood that issues in nonprime would not be limited to the fourth quarter, that you would see some effect in 2007, but frankly I don't think that was fully factored in," Henderson told reporters.
GMAC has said it expected improved results at its housing finance unit, ResCap, this quarter. Henderson declined to elaborate on that forecast.
Really? "Declined to elaborate." I'm shocked!
Back on the automotive side, the rose-tinted glasses also look like they need a new prescription.
Lehman Brothers analyst Brian Johnson said the earnings called into question whether a new pickup truck line, including the Chevrolet Silverado, would bolster the GM's results.
I think that a quick look at
gas prices answers
that question.
For years it seems the only profitable part of GM's portfolio has been its lending arm, GMAC. Now it looks like the General is losing the battle on that front as well. While the company has managed to pare its losses on the automotive side through cost cutting (read: eliminating jobs, not actually selling more cars), it is now taking a hit from the deflating housing bubble.
Back on the automotive side, the rose-tinted glasses also look like they need a new prescription.
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