GM posts $3 billion loss

By Kevin Krolicki and David Bailey

DETROIT (Reuters) - General Motors Corp (GM.N) posted a narrower-than-expected quarterly loss on Wednesday as sales gains in Asia and Latin America overshadowed a slump in the U.S. market, sending its shares up 13 percent.

The No. 1 U.S. automaker fell to a net loss of $3.25 billion, or $5.74 per share, from a year-earlier profit, reflecting the impact of a costly supplier strike and waning demand in North America for GM's most profitable vehicles.

But excluding $2.2 billion in charges for struggling former subsidiaries, the results were better than forecast and investors applauded GM's ability to avoid a worse result at a time of mounting pressure in its home market.

GM took a $1.45-billion charge for its remaining investment in finance company GMAC in the first quarter and a $731-million charge for its exposure to the bankruptcy of auto parts supplier and former subsidiary Delphi Corp (DPHIQ.PK)

Revenue declined 2 percent to $42.7 billion.

Excluding charges, GM reported a first-quarter loss of $350 million, or 62 cents per share, much narrower than the average Wall Street forecast for a per-share loss of $1.67 as tracked by Reuters Estimates.

GM, which has lost a combined $51 billion over the past three years, said the quarterly results pointed to some progress in its turnaround effort.

But executives also cautioned that the Detroit-based automaker would face a slower recovery in the United States in the second half of this year and a faster shift out of more profitable trucks and SUVs in response to higher gas prices.

Analysts had a mixed reaction to GM's results, including its negative cash flow of $3.8 billion in the quarter.

"Rationalizations abound, but we are left wondering: where is the bottom in North America?" Calyon Securities Mark Warnsman said in a note. "For a company in turnaround, cash flow is the ultimate test -- a test on which GM is failing to achieve a passing grade."

But JP Morgan analyst Himanshu Patel said the GM results were "not as bad as feared."

Some analysts noted that GM shares had been due for a bounce at the first sign of good news, due to a buildup in short positions during a 15 percent slide in the share price since the start of the year. Holders of short positions hope to buy back borrowed shares at a lower price, sometimes leading to a rebound in prices.

RECOVERY SEEN LESS 'ROBUST'

GM Chief Financial Officer Ray Young said GM was still forecasting a second-half recovery in U.S. auto sales but now believed the industry turnaround would be weaker than it had expected at the start of the year.

"We still believe there is going to be a second-half recovery, but probably not as robust as what we had thought at the beginning of the year," he said.