Oct 16, 2002 By John Porretto Ap Business Writer 3 min read

DETROIT (AP) – General Motors Corp. said Tuesday it lost $804 million in the third quarter, due largely to a $1.37 billion expense related to its investment in Fiat Auto Holdings and other one-time charges. Excluding those items, the world’s largest automaker easily beat Wall Street expectations. The company also raised its fourth-quarter expectations.

In late morning trading, GM shares rose $1.67, or 5 percent, to $34.93 on the New York Stock Exchange.

GM, Ford Motor Co. and other auto-related companies have seen their share values battered in recent weeks on concerns about industry growth and the overall economic picture as profits continue to be squeezed by their offers of generous incentives as they battle for customers amid a sluggish economy.

GM’s loss equates to $1.42 a share and compares with a loss of $368 million, or 41 cents a share, in the year-ago quarter.

Those figures include results from GM’s Hughes Electronics satellite television business, whose proposed merger with EchoStar Communications Corp. was blocked last week by federal regulators. Hughes, which said Monday it would aggressively try to salvage the merger, lost $81 million in the third quarter.

Sales for the quarter rose nearly 3 percent to $43.58 billion from $42.78 billion in the year-ago quarter.

“A steady stream of successful products and a rigorous cost focus continue to move us in the right direction,” GM president and chief executive Rick Wagoner said. “Our operations in North America are running very well, and we’re striving for the same level of performance in other regions.”

Excluding one-time items, GM’s earnings were $615 million, or $1.20 a share, in the recent quarter. A consensus of Wall Street analysts polled by Thomson First Call expected GM to earn 99 cents a share, including the Hughes loss.

In a conference call Tuesday morning, GM chief financial officer John Devine said the company was disappointed by the Federal Communications Commission’s actions and that GM continued to work with regulators to resolve concerns.

If the merger were nixed for good, Devine said the company has alternatives, but he declined to discuss them.

“We believe the merits of the merger are still very strong,” Devine said. “They’re in the public interest, and we certainly believe they’re in the shareholder’s interest.”

Another sour note in Tuesday’s report was the 20 percent stake that GM bought in Fiat two years ago. The huge writedown reflects the Italian automaker’s crumbling amid slumping sales. Last week Fiat said it would eliminate 20 percent of its domestic work force, or 8,100 jobs, over the next few months.

GM said its global automotive operations earned $345 million in the third quarter, up 60 percent from the year-ago period. Income at GM North America increased more than 14 percent to $510 million.

Production volume increased 5.6 percent, but the pricing environment continued to be challenging.

GM Europe narrowed its quarterly loss to $180 million from $287 million a year earlier. GM Asia-Pacific posted a profit of $76 million, up slightly from the $60 million in the year-ago period.

GMAC earned $476 million in the latest quarter, 9 percent higher than last year’s third quarter.

GM expects its earnings in the fourth quarter, excluding Hughes and any special items, to be about $1.50 a share, based on solid results in North America but continued losses in Europe and Latin America. That’s higher then the current analyst consensus of $1.48 per share, according to Thomson First Call.

GM’s year-to-date net income is $716 million, or $1.63 per share, compared with $346 million, or $1.16 per share, after nine months of 2001. Revenue rose 5 percent to $138.1 billion compared with $131.3 billion.

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On the Net:

General Motors Corp., http://www.gm.com/