Record revenue drives high GM earnings

John Porretto

Thursday, Jan. 16, 2003 | 9:47 a.m.

DETROIT -- General Motors Corp.'s earnings surged in the fourth quarter on record revenue as the world's biggest automaker offered hefty incentives to car buyers.

GM said today it earned $1 billion, or $1.71 a share, for the October-December period compared with $255 million, or 60 cents a share, in the prior-year period.

Revenue climbed to $48.7 billion, its highest total ever for the period, from $46 billion a year ago.

Sales at year's end were driven by heavy incentives as GM sought to meet market-share goals. The automaker posted its second straight U.S. market-share gain in 2002 for the first time since 1976.

Excluding special items at its Hughes Electronics Corp., which owns the DirecTV satellite television service, GM earned $850 million, or $1.62 cents a share, in the fourth quarter.

That beat by 10 cents the forecast of Wall Street analysts surveyed by Thomson First Call.

"GM delivered strong results despite challenging global economic and market conditions," president and chief executive Rick Wagoner said in a statement. "Strong launches of well-received products, aggressive marketing, improved quality and productivity and continued cost reductions were the primary drivers of our improved performance."

GM also said that about 130,000 hourly workers in the United States will qualify for profit-sharing payments this year.

A typical U.S. hourly employee will qualify for a payment of about $940, the automaker said.

In morning trading on the New York Stock Exchange, GM shares rose 72 cents, or 1.8 percent, to $40.92.

GM's automotive operations earned $563 million in the fourth quarter, compared with $66 million in the prior-year period. That increase was fueled by income growth at GM North America and Asia Pacific and moderating losses in Europe and Latin America.

GMAC, the company's financing arm, earned $524 million in the fourth quarter -- a fourth quarter record.

Excluding operating results from Hughes, earnings in the fourth quarter totaled $934 million, or $1.67 cents a share, more than double the $386 million, or 69 cents a share, in the same quarter of 2001.

Hughes lost $84 million in the fourth quarter, compared with a loss of $131 million for the same period a year ago.

Wagoner said earlier this month that GM would announce plans within 60 days for the Hughes unit, which scuttled a proposed merger last month with EchoStar Communications Corp.

The proposed marriage was nixed after government opposition stalled the deal.

For the year, GM earned $1.7 billion, or $3.35 a share, compared with $601 million, or $1.77 a share, a year earlier, Revenue rose to $186.8 billion from $177.3 billion a year ago.