$39B Charge Puts Brakes on GM's Earnings

Automaker could post biggest loss ever, nearly $70 per share
By Jim O'Neill,  Newser User
Posted Nov 7, 2007 7:23 AM CST
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)
camera-icon View 2 more images

(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.