- The Washington Times - Friday, January 17, 2003

DETROIT (AP) Strong sales and cost-cutting efforts helped General Motors Corp. overcome falling vehicle prices and post fourth-quarter profits that handily beat year-earlier results as well as Wall Street forecasts.
The world's largest automaker said yesterday that it earned $1 billion, or $1.71 a share, for the October-December period compared with $255 million, or 60 cents a share, a year earlier.
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 hit market-share targets and compete with Ford Motor Co., DaimlerChrysler AG's Chrysler Group and foreign brands.
GM shares fell 47 cents to close yesterday at $39.73 on the New York Stock Exchange.
GM increased its U.S. market share to 28.3 percent for the year, up from 28.1 percent in 2001 and the first time since 1976 the company improved that number in back-to-back years.
But the push took a hefty toll on profits. GM said its net price on vehicles was off 3.2 percent in the fourth quarter compared with the year-ago period. Prudential Securities estimated that the pricing decline cost the automaker $1.18 a share for the quarter.
"We obviously want to improve our margins, but we're going to be competitive in the market place," said GM Vice Chairman and Chief Financial Officer John Devine.
Truck sales surged in 2002 and accounted for 57.4 percent of total U.S. sales, up from 53.7 percent in 2001.
"GM delivered strong results despite challenging global economic and market conditions," said President and Chief Executive Rick Wagoner. "Strong launches of well-received products, aggressive marketing, improved quality and productivity, and continued cost reductions were the primary drivers."
Ford, GM's crosstown rival, is expected to post a modest profit when it reports fourth-quarter earnings Tuesday.
Some analysts say it could be difficult for GM and other domestic automakers to increase U.S. market share as foreign transplants add new products and manufacturing capacity in North America.
Toyota Motor Co. and Honda Motor Co. the two largest foreign automakers in the United States both saw their shares rise last year. Toyota, including the Lexus brand, went to 10.4 percent from 10.2 percent, while Honda, including Acura, went to 7.4 percent from 7.1 percent.
GM has said it plans to begin an assault on the important midsize-car market with products such as the new 2004 Malibu. Observers say the task will be difficult.
"When you look at the Malibu, it's not exactly a head turner," said Mike Wall, an analyst with the forecasting firm IRN Inc. "Compared to other Big Three offerings, it may be somewhat of an improvement. But they're going to be challenged to compete with the Accords and Camrys of the world."
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.
In a conference call with analysts and reporters, Mr. Devine said the company expects to earn $1.45 a share in the first quarter of this year, 18 cents ahead of forecasts.
He said the company also expects to meet an earnings goal of $10 a share by mid-decade, though he acknowledged that pension liabilities would be a major hurdle.


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