Despite delivering better-than-expected earnings and raising its outlook for the next quarter, General Motors'
The world's largest automaker earned $1.41 per share in the fourth quarter -- excluding a gain on the sale of Hughes Electronics
2003 also wound up looking sub par on the cash flow statement. After generating $4.3 billion and $6.3 billion in free cash flow in 2001 and 2002, respectively, last year saw a big dip to $300 million.
The tepid reaction from investors today is probably attributable to both the drop in free cash flow and a decline in U.S. market share from 28.3% to 28%. In a nutshell, the core business is struggling as the automotive unit continues to play second fiddle to the company's GMAC financing arm.
For perspective, consider that GMAC generated $2.8 billion in net income in 2003. Meanwhile, GM's North American unit earned $1.2 billion. The entire automotive business, factoring in losses from foreign operations, earned just an adjusted $370 million.
The company's decision two weeks ago to re-institute a 0% financing program is only further evidence that even management is not optimistic about America's appetite for new cars. Consider that DaimlerChrysler