January 22, 2008 / 9:55 PM / 12 years ago

UPDATE 2-AmeriCredit posts surprise Q2 loss, cuts '08 view

(Adds analyst’s comments, share movement)

By Sweta Singh

BANGALORE, Jan 22 (Reuters) - U.S. auto-finance company AmeriCredit Corp ACF.N posted a surprise quarterly loss due to higher provision for loan losses, and cut its 2008 outlook by nearly half, amid deteriorating conditions in the credit and real-estate markets.

Shares of the company fell 7 percent to $9.55 in after-hours trading.

The results seem to suggest weakening of the U.S. consumer health and not just the impact of seasonality, Sameer Gokhale, an analyst with Keefe Bruyette & Woods, said.

The Fort Worth, Texas-based company reported a second-quarter loss of $19 million, or 17 cents a share, compared with earnings of $95 million, or 74 cents a share, a year ago.

Analysts expected the company to earn 22 cents a share, excluding items, according to Reuters Estimates.

Provision for loan losses more than doubled to $356.5 million in the quarter.

Gokhale said the increase in provision for loan losses is partly because of the economic weakness in states such as California and Florida, which have been hit by the U.S. housing downturn.

However, AmeriCredit’s results are consistent with other companies in the auto-finance sector, he said.

Gokhale said he sees AmeriCredit as a potential acquisition target given that its shares are currently trading at a discount to their book value and that the company has “pretty clean accounting”, allowing for easy integration.

AmeriCredit said it expects 2008 earnings of $1.35 to $1.55 a share, down from its prior forecast of $2.30 to $2.50 a share. Analysts expect earnings of $1.71 a share.

AmeriCredit, which competes with Credit Acceptance Corp (CACC.O) and Capital One Financial Corp (COF.N), has lost more than half of its market value in the last six months. (Reporting by Sweta Singh; Editing by Anil D’Silva, Vinu Pilakkott)

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