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September 8, 2008 5:25:52 AM CDT

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$39B Charge Puts Brakes on GM's Earnings

Posted Nov 7, 07 7:23 AM CST in Business 

(Newser) – In what’s likely to be the largest net loss in its history, GM today will announce earnings that include a $39 billion tax charge costing it nearly $70 per share. The charge rear-ends the automaker after a quarter that saw strong US sales and a positive labor pact with the UAW. GM traded at $35 after hours.

GM’s charge is a non-cash loss based on accounting rules that allow tax overpayments to be used as credits against future income. Credits are lost if a company doesn’t earn enough to use them. While GM’s core business rebounded, and it regained the world sales lead from Toyota, the company's struggling GMAC finance unit and ResCap sub-prime mortgage business have hurt it.

Sources: Detroit Free Press, Detroit News, Wall Street Journal

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Jason Beeman works on the assembly line at the General Motors Powertrain Warren transmission plant in Warren, Mich., in this June 1, 2006 file photo. (AP Photo/Carlos Osorio, file)   (Associated Press)
General Motors CEO Rick Waggoner. (AP Photo/Greg Baker)   (Associated Press)
General Motors CEO Rick Waggoner, second from right, shakes hands with He Jianqin, the executive vice president of Tsinghua University, as GM China President and Managing Director Kevin Wale, right, and...   (Associated Press)
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