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GM predicts loss

March 17, 2005|by PEPPER BALLARD

DETROIT (AP) - The world's biggest automaker, GM, is in new trouble in the world's biggest auto market.

Slumping North American sales of its sport utility vehicles and trucks, along with weaker-than-expected business in the car line that has become more important to the company, has General Motors Corp. conceding it faces significant losses in a quarter where it had hoped to squeeze out some profit.

Even as CEO Rick Wagoner was acknowledging "significant challenges in North America," GM's stock was dropping Wednesday to levels it hasn't seen since late 1992. It fell $4.71, or almost 14 percent, to close at $29.01 on the New York Stock Exchange.

In a conference call Wednesday with Wall Street analysts and automotive journalists, Wagoner said the company "obviously underran our share and sales targets" for January and February - miscues that have contributed to lower production schedules for the first and second quarters.

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GM's U.S. sales were off 6.2 percent in the first two months of 2005, contributing to already inflated inventories and prompting the production cuts.

GM said it expects a first-quarter loss of about $1.50 a share, compared with a previous target of break-even or better. It expects income of $1 to $2 per share for the full year, down from its previous guidance of $4 to $5. Cash flow for the year, once expected to be a positive $2 billion, now looks to be negative $2 billion.

GM is scheduled to report first-quarter results April 19.

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