GM posts loss, vows to repay U.S. early

By Kevin Krolicki and David Bailey

DETROIT (Reuters) - General Motors Co said on Monday it lost $1.2 billion in a bankruptcy-shortened third quarter, but it vowed a quick repayment of $8 billion owed to the United States and Canada.

The results gave analysts and potential investors the first look at GM's books for the period from July 10, when the top U.S. automaker emerged from a fast-track sale out of a bankruptcy engineered and financed by the Obama administration, through the end of the third quarter.

Revenue for the entire third quarter dropped 26 percent to $28 billion.

Analysts said the results underscored the pressure facing the automaker even after a $50-billion financing package that has made the U.S. government a 61-percent owner.

"They are still on life support as a business and they are going to continue to be," said Mirko Mikelic, a portfolio manager at Fifth Third Bank in Grand Rapids, Michigan.

Chief Executive Fritz Henderson said the results showed GM has "significantly more work to do" despite topping its own targets for market share and sales as it came out of bankruptcy.

"The first step in the turnaround is to stop the bleeding, stop shrinking as we get to the foundation," Henderson told financial analysts on a conference call.

The "new GM" has cut 34,000 jobs globally from the start of the year, eliminated $78 billion of debt and built up a cash hoard of almost $43 billion thanks to its bailout. It has also cut its U.S. inventories of unsold vehicles in half.

Henderson's predecessor, Rick Wagoner, was asked to step down by the White House after resisting plans for a bankruptcy that GM had long argued would hurt consumer confidence.

FROM ONE POCKET TO THE OTHER?

Bolstered by its bailout, GM ended September with almost $43 billion in cash compared with $14 billion a year earlier.

That included $17.4 billion in a special account created with bankruptcy financing provided by the U.S. government. GM said it has allocated $8.1 billion from that taxpayer-funded account to pay off its government debt.

"This is basically them taking money from one pocket and putting it in the other," said Brad Coulter, an automotive restructuring adviser at O'Keefe & Associates.

"But they need to keep showing that they are stabilizing to get consumers back in showrooms. They also need to show investors and creditors that the business has stabilized and it's OK to invest in the auto supply base," he said.

GM's results were not prepared according to generally accepted accounting principles and were not comparable to past results. GM has lost $88 billion since 2005.