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.