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Rattner Says GM to Show Quarterly Profit Next Week

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Rattner Says GM to Show Quarterly Profit Next Week (Update2)

May 10, 2010, 6:22 PM EDT

(Adds analyst’s comments starting in seventh paragraph.)

By Doron Levin

May 10 (Bloomberg) -- Steven Rattner, the former head of President Barack Obama’s automotive task force, said General Motors Co. will report a quarterly profit outside of bankruptcy next week for the first time in three years.

“GM is on a path to sustained profitability, given the rate of car sales and its lower cost base,” said Rattner, speaking at the Detroit branch of the Federal Reserve Bank of Chicago at a conference sponsored by Wayne State University to review the task force’s activities. He also said the first- quarter results will be revealed May 17; GM hasn’t set a date.

Rattner stepped down from the post in July after GM and Chrysler Group LLC emerged from the bankruptcies of General Motors Corp. and Chrysler LLC. GM has repaid the $8.4 billion in loans from the U.S., Canada and Ontario, leaving the U.S. with $42.2 billion in common equity and preferred stock, a senior administration official has said.

“When we did this restructuring we never expected a full recovery of our investment,” Rattner said. “If it ends up costing us $10 billion we should consider it a success.”

GM reported a $78.2 billion profit for last year’s third quarter, which included its recapitalization coming out of bankruptcy. Its last regular quarterly profit was in the April- to-June period of 2007.

GM ‘Encouraged’

“We’re encouraged by our progress, and we’ll discuss that progress in detail when we release our first-quarter results later this month,” said Renee Rashid-Merem, a GM spokeswoman. “Until then, we’re not going to comment on our first-quarter results.”

Chief Executive Officer Ed Whitacre has indicated an expectation of a profit for the first quarter, said Dennis Virag, president of Automotive Consulting Group Inc. in Ann Arbor, Michigan.

At an event at GM’s Fairfax Assembly in Kansas City, Kansas, in April Whitacre said the company had developed a healthy, clean balance sheet and a cost structure that would allow GM to be competitive. At the same event, he said he expects GM to issue public shares in late 2010 or early 2011 and that the stock could be worth a lot.

“Whitacre has come out several times and said GM expects a profit for the year,” Virag said. “He didn’t predict a first- quarter profit, but I don’t believe he would be talking about profits if he didn’t expect to post one.”

--With assistance from Katie Merx in Southfield. Editors: Jamie Butters, John Lear.



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