GM outlook disappoints, shares tumble

General Motors Company posted a lower third-quarter profit on losses in Europe and offered a disappointing outlook that raised doubts about the speed of its turnaround two years after emerging from bankruptcy.Reuters reported that GM vowed to slash costs to shore up margins in a sputtering economy but its fourth-quarter outlook disappointed investors and sent shares tumbling 10 per cent on Wednesday.The 15 per cent drop in third-quarter earnings and worries about slowing growth in key markets like Brazil prompted questions about whether the top United States automaker had taken its foot off the pedal after a 2009 taxpayer-funded restructuring wiped away its debt problems.The Chief Executive Officer, Dan Akerson called the third-quarter result solid but quickly added solid isnt good enough, an unusually stark assessment from a company long-criticised for moving too slowly to admit mistakes and force changes.GM vowed to slash costs and simplify historically tangled operations, steps its closest rival Ford Motor Company has emphasised over the past five years under CEO Alan Mulally.You just cant turn on a dime, the Senior Portfolio Manager with Fifth Third Asset Management, Mirko Mikelic said. He noted that GMs turnaround remained complicated by the US Treasurys 27 per cent ownership stake.I dont think the US government wanted to see them do a scorched-earth policy - go into bankruptcy and radically change everythingbecause that would have had an impact not only on GM but their suppliers, and that would have hurt the overall industry, he said.The biggest drag on GMs third-quarter results came from Europe, where the automaker posted a $300m loss. GM opted to keep the German Opel brand two years ago after saying it would sell the unit, but it has struggled to turn around its European operations since. On Monday, GM announced it would change its top executive in Europe.The big story today is going to be what looks like a pretty disappointing fourth-quarter outlook, Citi analyst, Itay Michaeli said, who has a buy rating on GMs shares.GM backed away from its full-year target for Europe, saying it no longer expected to break even before restructuring costs. Akerson described Europes economy as a morass. He also vowed more cuts in Brazil after reducing four per cent of the automakers jobs there.
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