General Motors (NYSE: GM) announced its fourth-quarter and annual results yesterday and, depending on your focus, the company either performed very well or very poorly.
Earnings for the fourth quarter came in at $630 million, or $1.11 per share, down a staggering 37% from its $1 billion, or $2.13 per share, performance in the fourth quarter of 2003. Excluding special items doesn't paint a much better picture. For the quarter, adjusted earnings totaled $569 million, or $1.01 per share, dropping from $838 million, or $1.47 a share, a year ago.
I suppose you're wondering what could possibly be good about results like that. Well, analysts (we know how accurate they usually are) were expecting per-share earnings of $0.91. GM easily topped those low estimates.
The annual view is also a bit varied. For the year, GM earned $3.7 billion, or $6.51 per share, down from $3.8 billion, or $7.14 a share, in 2003. But if special items are excluded, the company earned $3.6 billion, or $6.40 a share, which is an increase from $3.2 billion, or $5.62 per share, a year earlier.
The international arena also presented a conflicting picture. In Europe, GM continued to struggle, losing $742 million in 2004 after losing $286 million in 2003. However, the company fared better in its smaller markets. GM reported record net income of $729 million in the Asia Pacific region in 2004. In its Latin America/Africa/Middle East markets, GM earned $85 million for the year, blowing past its loss of $331 million in 2003.
And finally, even the picture of GM's market share is convoluted. As the world's top automaker, GM continues to hold off competitors hoping to one day take over the top spot. GM gained market share in three of its four regions. However, the lone down market just happened to be its biggest and its own -- North America. Despite a plethora of incentives and new vehicles, GM's North American market share fell to 25.7%, down from 28% at the end of 2003.
So, what's the picture really trying to tell us? Well, much like art (I really know nothing about art), it depends on your interpretation. From my view, it appears GM had an OK and unsurprising year overall, and I expect similar results in 2005. GM will likely continue to lose market share to Japan's top automakers. Toyota (NYSE: TM) remains the top threat, but Honda (NYSE: HMC) and Nissan (Nasdaq: NSANY) should also continue to gain larger shares of buyers in the U.S. GM also continues to face stiff domestic competition as Ford (NYSE: F) and DaimlerChrysler (NYSE: DCX) both released new designs that were popular with consumers.
With such strong and increasing competition, I just don't view GM as a strong investment for the time being. I expect it to improve on its dismal performance in Europe, but it likely won't see benefits until late in the year. China should also present some interesting growth opportunities. But, in its biggest market, GM will likely continue to struggle to stay ahead of the competition.
Fool contributor Mike Cianciolo welcomes feedback and doesn't own any of the companies in this article.
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