Ahead of its pending stock sale, General Motors (GM) announced a third quarter profit of $2 billion. Next week, the company will initiate an initial stock offering (IPO) of 365 million shares at $26 to $29 a share. The IPO will raise about $10 billion and allow the company’s largest current owner, the U.S. government, to reduce its stake from 61-percent to roughly 43-percent. The profit report certainly can’t hurt public appeal.
GM reported that strong profits on new cars and trucks helped the company’s 3Q numbers. The results were yet another indication of the widespread recovery among global automakers. Each of Toyota, Nissan, Honda, Chrysler, and Ford reported improved numbers for the quarter as auto sales continue to rise.
“I think the results of the third quarter clearly point to the amount of progress that GM has made,” said GM CEO Dan Akerson. He said that GM is on track to make 2010 its first profitable year since 2004. This was the third straight profitable quarter for GM.
Though the company needed $50 billion in government aid last year, it has repaid or plans to repay $9.5 billion of that while the government hopes to get the other $40 billion back in not only the November 18th common stock offering, but subsequent sales as well. The government will sell 264 million shares and will make about $7 billion in the IPO if the shares sell in the middle of the expected price range.
The U.S. government’s reduced stake is important to GM symbolically because some Americans resented the company’s taxpayer-funded bailout. The jokes that GM stood for “Government Motors” hurt not only the company’s image, but its sales.
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