Today, General Motors Corp. published their third quarter financial reports, posting a net loss of $2.5 billion, or $4.43 a share. Depleting about $6.9 billion in the span of three months, GM closed out the quarter on September 30th with $16.2 billion in the bank, down from $21 billion at the end of June.
Calculating a minimum of anywhere from $11-$14 billion is needed in order to operate, GM announced in July hasty plans to quickly generate a $15 billion dollar positive cash flow, which included possibly refinancing the Renaissance Center. Today, GM confirmed that their financial problems have officially exceeded their private capacity to contain them. Said the official release, “Even if GM implements the planned operating actions that are substantially within its control, GM’s estimated liquidity during the remainder of 2008 will approach the minimum amount necessary to operate its business.”
Unless the floundering industry experiences a drastic upswing within the very near future, GM has plainly stated that government intervention will be necessary to continue operations. The $15 billion sought to plug the leak in July will no longer be sufficient, and GM has admitted their only possibility for survival lies within outside assistance. Said GM Chairman and Chief Executive Officer Rick Wagoner, “The U.S. government’s actions to help stabilize the credit markets and eventually ease the credit crunch are an essential first step to the economy’s and the auto industry’s recovery, but further strong action is required.”
Source: General Motors Corp.