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Subject: GM Quarterly Loss Hits $759 Million; Major Changes Expected at Board
Date: Fri, 30 Oct 92 04:28:31 EST
Message-ID: <49.1992Oct30.042831@AmeriCast.com>

GM Quarterly Loss Hits $759 Million; Major Changes Expected at
Board Meeting<By Warren Brown and Frank Swoboda=Washington Post
Staff Writers= General Motors Corp. yesterday reported a $752.9
million loss for the third quarter on eroding sales and market
share in its core North American car market.

 The earnings report comes just before GM's 15-member board is
scheduled to meet in New York to pick a replacement for Chairman
Robert C.  Stempel, who resigned Monday under fire over the
company's poor financial performance. The board also is expected
to announce other major changes in GM's top management ranks at
its Monday meeting.

 In addition, several of the 11 directors who are not GM employ-
ees - perhaps as many as four - might announce their resignations
at the board meeting, according to sources. These longtime direc-
tors have not been as anxious for management change as those
leading the shake-up. There was speculation within GM that if
that happened, the resigning board members would not be replaced,
solidifying the control of the directors who have engineered the
management upheaval so far.

 In GM's third quarter, analysts estimated that its North Ameri-
can losses - a number the company does not make public - were
more than $1 billion. Some of those losses were offset by strong
performances by GM's European auto operations and its non-
automotive subsidiaries in the United States.

 Stempel tried to put the best face on yesterday's report, noting
that the loss was almost $100 million less than the company had
predicted in a filing with the Securities and Exchange Commission
two weeks ago.

 Stempel and GM President John F.  Smith Jr., in a joint state-
ment, called the quarterly results an improvement over the third
quarter of last year, when the company lost $1.1 billion.  "We're
ahead of schedule," they said, "in reducing the employment level
in our North American operations."

 Last year, GM's North American car and truck operations  lost
more than $7 billion, according to estimates, the largest loss in
U.S. corporate history. Overall, the company lost more than $4
billion in 1991, and analysts say it is on its way to recording a
billion-dollar loss this year. For the first nine months, GM lost
$970.7 million.

 At the upcoming meeting, the board is expected to announce the
appointment of former Proctor & Gamble Co. chairman John G. Smale
as interim chairman to replace Stempel. Smale is chairman of the
board's executive committee. The board also is likely to name
Smith as chief executive, a post now held by Stempel. And a
number of other key GM executives probably will resign as part of
a board purge of Stempel allies, according to sources.

 It was clear yesterday, however, that Wall Street analysts want-
ed to hear more from GM than just personnel changes.

 "The worst thing that could happen Monday is that we just get an
announcement saying that Mr. Smale is the interim chairman and
that Mr. Smith is the new chief executive officer," said John
Kirnan, an analyst with Salomon Brothers Inc. in New York. "It
would be very disappointing if that happens without any more an-
nouncements of people and plant cuts."

 Last December, GM announced it was eliminating 74,000 jobs from
its worldwide auto work force of 538,000 people and closing 21 of
its more than 120 North American factories as part of a massive
restructuring. So far, GM has identified only nine of the 21
parts and assembly plants it plans to close by 1995.

 Several analysts speculated yesterday that GM would wait until
after Tuesday's presidential elections to name the remaining 12
plants rather than announce the closings after Monday's
election-eve board meeting.  "They want to avoid any appearance
of taking an action that might influence the outcome of the elec-
tions," said Joseph Phillippi, an analyst with Lehman Brothers
Inc. in New York.

 GM's top management is scheduled to meet with securities
analysts in New York on Nov. 12. Any cutback announcements are
expected to be made before then, sources said.

 The bright spots in GM's third quarter were the quarterly
results from Electronic Data Systems, which reported record
third-quarter income of $167.3 million, a 15 percent increase
over the third quarter of last year, and GM Hughes Electronics
Corp., which reported third-quarter earnings of $155.2 million,
nearly five times greater than the same period last year.

 But the results for the U.S. auto business showed the company
losing more than a full percentage point of its share of the U.S.
market. GM said its market share was 33.3 percent in the third
quarter of 1992, compared with 34.5 percent a year ago. Overall
sales in the United States were down 3.2 percent from the  third
quarter of 1991.  Despite the bad numbers, Lehman's Phillippi
said there was some good news in the earnings report for GM. He
said the company was able to hold down its losses despite the
fact they had "the softest quarter in terms of unit (car and
truck) sales in at least six years."

 Stempel and Smith attributed the better-than-predicted third-
quarter performance to "aggressive cost-cutting activities."<

02:33 10-30C9999-----

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