Sunday, February 25, 2007

Subprime Troubles To Lead to 41c/Shr Earnings Shortfall at GM

A good source on Wall Street sent me research this evening from Citi analyst Jon V Rogers stating that higher credit provisions at GMAC's ResCap unit could lead to a shortfall of 41-cents a share at GM for 2006 Q4. Further, GM's annual run rate EPS could be cut by at least 14-cents starting this year. Citi is maintaining at SELL rating on GM.

Due to a variety of subprime issues, the report says Residential Capital's Q4 net income could be driven down to a loss of $160 million from a profit of a $119 million last year.

One other note, Rogers says GM may pay GMAC $400-mln to adjust tangible book value in light of the ResCap problems. Ya just can't make this stuff up.

3 comments:

Lauriston said...

Foreclosures in the Buckeye State

http://wcpo.com/news/2007/local/02/23/foreclosure.html

it's getting noticed slowly but surely...

mike said...

Jim,

What are your thoughts on NEW this week (March 1) earnings report? I think they will definitely get hit but do you think everyone has priced in all the bad news? That what everyone thought on NFI but looked what happened.

Thanks

Mike

Jim K said...

options players surely don't think bad news is fully discounted.