GM CEO Whitacre to step down as company posts $1.3B profit

Updated 28m ago
By James R. Healey, USA TODAY

General Motors CEO Ed Whitacre said Thursday that he is stepping down, the same day GM reported that it made a profit of $1.3 billion the second quarter, bringing its half-year earnings to $2.2 billion.

Dan Akerson, a GM board member who joined in July 2009, when Whitacre took over the post-Chapter 11 GM, will succeed Whitacre Sept. 1.


READ: GM announces CEO succession plan

Akerson will become CEO Sept. 1 and take Whitacre's spot as chairman of the board by the end of the year, GM says.

Whitacre will then leave the world's second-biggest car company behind Toyota Motor.

He said Thursday that the job always was intended to be temporary.

"It was my plan all along ... to help return this company to greatness, and I didn't want to stay a day beyond that," he said during a conference call with reporters and investment analysts.

Akerson said, "Ed and I share a common vision for the company, where it is today and where we hope to take it in the future. Detailing his priorities or his plans for a post-Whitacre GM "would be premature," he said.

He declined to say if he would shake up management. "I have to get my feet on the ground before I discuss that subject." He did acknowledge that he doesn't foresee big changes.

Akerson is managing director at The Carlyle Group, a private global investment firm.

In its earnings report, GM said second-quarter revenue was $33.2 billion, up from $31.5 billion the first quarter.

GM, disclosed for the first time Thursday that it lost $12.9 billion in the second quarter last year and lost $18.9 billion in the first half last year.

Earlier this year, it said it lost $4.3 billion from July 10 through Dec. 31 last year, under so-called "fresh-start" accounting, which it adopted after going through Chapter 11 bankruptcy reorganization and creating a new company, called General Motors Co. instead of General Motors Corp.


READ: GM's press release
MORE: About The Carlyle Group

GM is 60.8% owned by the U.S. government, which invested billions in taxpayer dollars to keep the car company afloat.

The automaker is expected to announce an initial public stock offering (IPO), as soon as today. That would let the government sell its GM stock and recover at least some of the $40.7 billion it put into the company.

When GM announced its 2009 loss, the company said: "Going public will enable the company to invest in designing, building and selling the world's best vehicles, attract the best people and access the capital markets. One of the most important measures in establishing the foundation for going public is the company's ability to return to sustainable profitability."

"I am pleased with our progress on achieving our business objectives," Chris Liddell, vice chairman and CFO, said Thursday. "We have delivered strong product, maintained cost discipline, progressed strategic initiatives such as restructuring Europe and acquiring AmeriCredit, and delivered two consecutive quarters of profitability and positive cash flow."

The automaker said it ended the quarter with $32.5 billion in cash and marketable securities, down slightly from $35.7 billion at the end of the first quarter.

The auto industry is recovering from a crushing recession last year, which also forced Chrysler into Chapter 11. Chrysler now is 20% owned by Italian conglomerate Fiat Group, which has management control of the Detroit automaker.

Ford Motor (F) borrowed heavily in 2006, when loans were easier to get. It has been able to operate on that money and hasn't needed taxpayer bailout money to survive.

Ford earlier reported a second-quarter profit of $2.6 billion, fifth consecutive quarter it has been in the black. Chrysler, which got $15.5 billion in bailout money, has said it lost $172 million the second quarter, slightly less than its first-quarter loss.

The rising tide of auto sales in the U.S. lifted GM along with its rivals. GM reported that second-quarter sales of all its core U.S. brands were 9% better than a year earlier.

European sales were off 7%, but other international results were up, GM said, bringing its global sales for the quarter to nearly 2.2 million new cars and trucks, up 11% from last year.

Even so, GM's U.S. new-vehicle sales through July slightly underperformed the industry — up 13% vs. 14.8% for the industry, according to sales tracker Autodata.

As part of the bankruptcy reorganization, GM pared its lineup drastically, retaining Buick, Cadillac, Chevrolet and GMC in the U.S. Hummer, Pontiac, Saturn and Saab were killed or sold.

Following the auto-industry maxim that "sheetmetal sells," GM's biggest sales jumps have come from its freshest models, such as the Buick LaCrosse, Cadillac SRX and Chevrolet Camaro.

However, the automaker's earnings report said it still is relying heavily on lower-profit sales to fleets, such as car rental companies: 42% of its car sales and 28% of truck sales were to fleets, which pay heavily discounted prices. Overall, GM reported, the fleet mix was 33.5%, up from 28.9% a year earlier.

http://www.usatoday.com/money/companies ... 2-gm_N.htm