Tuesday, May 09, 2006

Another Misleading Title For a News Story.

GM's 1st quarter: From red to black

That is the title of an article from today's Detroit News. The story is that General Motors earned a profit of $445 million in the 1st quarter even though they had earlier posted a loss of $323 million that quarter. What happened to all that red ink?

Even the first paragraph of the story raises some questions in my mind.

General Motors Corp. revised its first-quarter results Monday from a preliminary loss of $323 million to a $445 million profit after changing the way it will record its obligations as part of a health care agreement struck with its workers last year. (Bold lettering is what got my attention.)

Alot of it looks like the company may be headed for a sounder footing in the near future, but creating profit by creative accounting (as the above paragraph suggests to me) makes me nervous.

Some of it is legitimate but not easy to repeat next quarter, such as the cash influx from selling their holding in Suzuki (but what major asset can they sell this quarter?)

3 Comments:

Anonymous Anonymous said...

The change was not creative accounting, it was done after consultation with the SEC.

6:32 PM  
Blogger shoprat said...

Yes anonymous, I read that part too, but that does not keep me from having an uneasy feeling and some skepticism about it.

8:01 PM  
Blogger ABFreedom said...

They also have Lotus in Europe don't they? ... that might be next.

9:30 PM  

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