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New GM CFO: Automaker could make a profit this year

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New GM CFO: Automaker could make a profit this year

Robert Snell / The Detroit News

Detroit -- General Motors Co. has a reasonable chance of being profitable this year, new Chief Financial Officer Chris Liddell said today.

In a wide-ranging interview with reporters at the Renaissance Center, home to GM headquarters, Liddell discussed the automaker's efforts to prepare for selling shares of the company to the public, instituting fresh-start accounting, his relationship with Chairman and CEO Edward Whitacre Jr., and repaying the government's $50 billion investment in GM.

The get-together was a coming out party for Liddell, who has kept a low media profile since being hired in December by Whitacre.


Liddell, who has been on the job for about seven weeks, is viewed by many as the CEO-in-waiting and was Whitacre's first major hire -- one aimed at improving GM's reputation and financial organization.

Liddell disagreed with characterizations by the members of President Barack Obama's auto task force that GM's financial organization, prior to last year's bankruptcy filing, was among the worst they'd seen at a large corporation.

"The financial organization here is not as bad as what was characterized," Liddell said. "I'm not going to say it's perfect and can't be improved. All I can say is, the people I've inherited, who report to me, I think are actually very good. These situations are never as good or as bad as they look from the outside."

Liddell replaced Ray Young, who became vice president of international operations.

Liddell said GM might launch an initial public offering of company stock later this year, but conditions have to be right. The economy, financial markets and vehicle sales have to improve, and GM needs to be profitable before that happens, he said.

"I don't want to get in the position where we say, 'We've got to do an IPO, we've got to do an IPO,' " Liddell said. "It's an important milestone. But we do it when we're ready, not on some predetermined timetable."

In January, Whitacre predicted GM would be profitable this year but days later softened his comments, saying, "I hope we can achieve a profit."

Liddell, who was CFO at Microsoft Corp., will be paid $750,000 plus stock awards and stands to get as much as $5.45 million in GM stock starting in 2012.

He holds a degree in engineering, ran a big forest products company in his native New Zealand and, as CFO of Microsoft, helped draft a $3 billion cost-cutting plan.

Liddell, who also serves as a vice chairman, picked GM over about four other job opportunities

"This was the hardest job, the least amount of pay, probably the toughest situation of all the ones I was looking at," he said. "Other than that, it was an entirely rational decision. Relative to the other things I was looking at, I thought this was far and above the most interesting, challenging and important."

The decision to work at GM was simple given the automaker's emergence from bankruptcy, he said.

"I think it is a once in a lifetime opportunity to do something incredibly important and incredibly interesting," he said. "If I can be part of the team that helps in the turnaround of GM, that's something I can be incredibly proud of in 10 or 20 years. From a financial point of view, you look at what we have to do over the next few years, there are more interesting things than most companies do in a lifetime."

Liddell said it was too early to speculate about eventually succeeding Whitacre.

"I've never been concerned about what I do. I'm concerned about whether what I do has impact," he said. "After five years (at Microsoft), I felt like I had made all the difference I could, and there were diminishing returns from a CFO point of view."

From The Detroit News: http://www.detnews.com/article/20100317/AUTO01/3170399/1148/New-GM-CFO--Automaker-could-make-a-profit-this-year#ixzz0iSIYumW0

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GM's Liddell sees chance for profit, IPO in 2010

March 17, 2010 - 12:00 pm ET

UPDATED: 3/17/10 4:49 p.m. ET

DETROIT (Reuters) -- General Motors Co. has a "reasonable chance" to show a profit in 2010 after five years of losses and could sell shares by late this year though it has no timetable for an IPO that would reduce the U.S. government's majority stake, CFO Chris Liddell said.

Liddell, speaking to reporters for the first time in his new role after joining GM from Microsoft Corp., said the automaker would not rush into an initial public offering.

"Even in the few months I've been here, I've been encouraged by the progress we've made, but when it will all come together is impossible to say," Liddell said of the timing for GM to return as a listed company.

GM received $50 billion of government financing to restructure in a bankruptcy steered by the U.S. Treasury, which owns almost 61 percent of the automaker.

Liddell said GM's restructuring has given it a shot at success by cutting costs and debt as it emerged from bankruptcy in July.

"The preconditions for success are extremely good -- although maybe not so obvious to people when they look from the outside," Liddell said.

He added: "I think we have a reasonable chance of being profitable this year. Relative to where we were a few years ago, that's enormous progress."

Turnaround temptation

GM has lost a combined $88 billion since last posting an annual profit in 2004. Liddell said the opportunity to be part of a turnaround at the automaker was part of the attraction as he weighed three other offers to leave Microsoft late last year.

"People say, 'why would you leave this incredibly comfortable existence?'" he said.

"I had got to the stage at Microsoft where, after five years, I felt I had made all the difference I could and was reaching the point of diminishing returns."

Liddell, who took a month off after leaving Microsoft, said the three other offers were with technology companies. He turned them down to join GM.

"I like to joke that this was the hardest job, this was the least amount of pay, this was the toughest situation I was looking at," he said. "But other than that, it was an entirely rational decision."

"If I can be part of a team that helps the turnaround at GM, that's something I can be proud of in 10 or 20 years," he said

Liddell, 51, a New Zealand native, is being paid a salary of $750,000 with $5.45 million in restricted stock and salary stock grants at GM.

His salary exceeds the cap of $500,000 imposed on firms that have taken the U.S. government bailout but an exception was approved for his hiring by Kenneth Feinberg, the U.S. Treasury's special master on pay.

Higher heights?

Liddell is considered a leading candidate to replace GM CEO Ed Whitacre, 68. The CFO was first recruited by Whitacre's predecessor, Fritz Henderson, in September.

He declined to discuss GM's succession plans on Wednesday, saying that it was "way too early" to consider just seven weeks into his term at the automaker.

GM's financial operations were sharply criticized in its slide toward bankruptcy.

Steve Rattner, the former investment banker who headed the Obama administration's autos task force, said the automaker was saddled with "perhaps the weakest finance operation" U.S. officials had seen at a major company.

But Liddell said the GM financial management team was not "as bad as characterized."

"These situations are never as good or as bad as they look from the outside," he said, adding that he had replaced seven of the 11 managers who had reported to him at Microsoft over five years.

"No one really noticed there because the cash flow was coming in every day," he said.

Liddell, who used to drive a Ferrari to commute to Microsoft's campus near Seattle, said he was working his way through a rotation of GM vehicles, starting with the Cadillac Escalade.

"I want to drive everything. I don't want to drive just the top-of-the-line cars," he said. "They're slowly but surely moving me through the whole fleet."

Read more: http://www.autonews.com/apps/pbcs.dll/article?AID=/20100317/OEM/100319909/1178#ixzz0iTbhnW0V

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