GM posts $15.5 billion loss as sales sputter

By Kevin Krolicki and David Bailey

DETROIT (Reuters) - General Motors Corp (GM.N) reported a $15.5 billion quarterly loss on Friday as North American sales dropped by 20 percent and resale prices for SUVs coming off lease plunged.

GM shares fell as much as 11 percent in reaction to the automaker's announcement of the much bigger-than-expected quarterly loss, the third-largest in its 100-year history.

The No. 1 U.S. automaker burned through $3.6 billion in cash in the quarter as it cut factory output by 27 percent in response to an accelerating downturn in its home market that has hammered sales of its trucks and SUVs.

GM executives declined to say how much cash the automaker expects to burn in the second half of this year but said the company needs a minimum of $11 billion to $14 billion to run its global operations.

GM ended the second quarter with $21 billion in cash and $5 billion in undrawn credit. It has since drawn down a revolving loan facility by $1 billion.

"GM does not face imminent liquidity concerns but we think will need to raise liquidity over the next 12 to 18 months," J.P. Morgan analyst Himanshu Patel said in a note.

GM has said it has the cash needed through 2009 even assuming industry-wide U.S. auto sales drop by some 13 percent this year and hold flat next year, as many analysts now expect.

Chief Financial Officer Ray Young said GM is on track to free up $15 billion in liquidity with cost-cutting, asset sales and new borrowing under a July plan intended to assure investors that the automaker can ride out the downturn.

"The second-half cash flows are fully baked into our plan," Young said on a conference call.

But after losses of $51 billion over three years and a drop in its share price to 54-year lows, GM is exposed to the risk of a further slowdown in the U.S. market, analysts said.

GM sales figures for July, released after earnings, showed that the market slide gathered momentum at the start the current quarter. July sales dropped 27 percent from a year earlier compared with a 16 percent decline in the first half.

"There is a long list of things they need to do," Calyon Securities analyst Mark Warnsman said. "It is all about managing for cash at this point."

LOSS DEEPER THAN ESTIMATES

GM's net loss was equal to $27.33 per share, compared with a profit of $891 million, or $1.56 per share, a year earlier, reflecting a sharp drop in demand for the light trucks that represent about 60 percent of its sales.

The company took $9.1 billion in charges, including $4.4 billion for restructuring and buyouts of U.S. factory workers and $2.8 billion for its exposure to bankrupt former parts unit Delphi Corp (DPHIQ.PK). GM also wrote down $1.3 billion of its equity interest in GMAC, its former finance unit.