Let's start with the obvious: GM (NYSE: GM) didn't need this.
It's already got problems with profitability, coupled with a terrible sales slump it shares with Ford (NYSE: F) -- but not with peers like DaimlerChrysler (NYSE: DCX), Honda (NYSE: HMC), or Toyota (NYSE: TM). Its debt is rated only slightly more attractive than discarded orange rinds, and now comes word of a restatement to the tune of oh, half a billion bucks, more or less. Less, actually -- $300 million to $400 million for 2001, and who knows what after that.
Officially, it is merely one "error" among several under investigation by the Securities and Exchange Commission -- this one regarding how and when supplier credits were recorded.
Now, before I start in with the criticism, I want to illustrate for you how serious GM is about trust and corporate stewardship.
As far as I can tell, the investors' PR file at the GM site includes no press release on this topic. (It was released as an 8-K to the SEC). Yet the automaker does have time today put together a few paragraphs to let us all know about something it calls the Escalade on Rodeo. With priorities like these, it's no wonder this company is sinking like a rock.
In the end, this $400 million -- and when, where, or even if it was ever earned -- may be immaterial. But for anyone out there still brave enough to invest in GM, this ought to highlight the complexity that hides beneath the surface of the car company-cum-mortgage banker.
Like Ford (whose silly earning tricks I highlighted a while back), or any other bank, GM's profits are based on all sorts of arcane opinions, decisions about reserves, and other far-from-obvious figures. It's not just "sell a car, subtract what it cost to build it, and book the difference as profit or loss." Toss in pension and health-care accounting, and you're looking at a company that may have all sorts of other super-scary skeletons waiting to jump out of the closet and give investors a bony, bladder-loosening hug.
Invest accordingly.
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Seth Jayson wonders just how long before GM goes to Uncle Sam with hat in hand. At the time of publication, he had no positions in any company mentioned. View his stock holdings and Fool profile here. Fool rules are here.
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