Imagine a struggling global industrial giant. Burdened by huge debt and legacy obligations, it struggles with overcapacity after decades of mismanagement. Nonetheless, it has solid sales and surprisingly deep reservoirs of goodwill in the marketplace.

Now let's make some changes at that company:

  • Lend it a ton of money on favorable terms.
  • Make that massive debt load largely disappear.
  • Get rid of most of the legacy obligations, and impose a new structure that will ratchet down the remaining ones over time.
  • Eliminate its surplus production capacity -- along with a few whole brands and divisions.
  • Fire key members of its inept management culture, and replace them with talented outsiders who aren't beholden to the old ways of doing things.

To top it all off, we give the new managers a recovering economy and a few months to get their bearings. Then they announce a profit.

And people are acting surprised?

Not even GM could have messed this up
General Motors, in case you haven't heard, announced its first-quarter earnings on Monday: $863 million in profit (versus a $6 billion loss a year ago -- a quarter after which GM effectively went bust), $31.5 billion in revenue (up 40%), and a billion dollars in new cash in the bank.

It was GM's first profitable quarter in three years -- a fine result. But I don't get why analysts were surprised, as The Wall Street Journal's report suggested. GM's sales have been strong in the face of stiff competition from Ford (NYSE: F) and Toyota (NYSE: TM), it has several hot products driving demand, and the U.S. government gave the company every advantage it could. How could GM fail?

GM's old management might well have found a way to fail anyway -- but new management is making all the right noises. New CFO Chris Liddell avoided declaring victory, characterizing Monday's results as "important steps" toward recovery as GM works to rebuild. And while he said that there was "no reason" why GM's core North American business shouldn't be sustainably profitable, he was careful to temper enthusiasm for GM's prospects later this year.

And that IPO, the one expected to (maybe) pay back the $43 billion or so that the company still owes American taxpayers? Don't hold your breath: Liddell said -- as he has been saying for weeks -- that the company will do it when the moment is right, and not before. Maybe that will be later this year; maybe it won't.

None of this news was surprising, if you've been watching GM in recent months. But the comparison to the GM of a year ago remains striking.

Just one more step on a long road
It's good to see a profitable quarter, but as Liddell pointed out, GM still has a long way to go:

  • GM's European operation still isn't profitable, and it may not break even until next year.
  • The Chinese auto market -- a growth engine for GM -- seems to be slowing.
  • Critical product launches -- including the Chevrolet Cruze small car -- are coming soon.
  • As GM's recovery gains steam, stakeholders such as the UAW will demand a share of the new wealth. Managing the union relationship is a perennial Detroit challenge, and CEO Ed Whitacre's skills on that front are as yet untested.

But there are plenty of promising signs:

  • Like Liddell before him, new marketing chief Joel Ewanick, who replaced GM lifer Susan Docherty, looks like an inspired hire.
  • Early reactions to the new Buick Regal sedan have been positive.
  • GM's new relationship with Google (Nasdaq: GOOG) suggests that the company is serious about responding to the push toward advanced in-car technology Ford has made with partners Sony (NYSE: SNE) and Microsoft (Nasdaq: MSFT). It could also give the company's OnStar division a new lease on life.

The next two or three quarters will be crucial, since those results will determine the value of GM's IPO -- which, in turn, will determine the value of We the People's "investment" in the carmaker.

Will GM's IPO be enough to repay that $43 billion? Scroll down to leave a comment and let me know.

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Fool contributor John Rosevear owns shares of Ford. Microsoft is a Motley Fool Inside Value selection. Google is a Motley Fool Rule Breakers recommendation. Ford is a Motley Fool Stock Advisor selection. Motley Fool Options has recommended a diagonal call position on Microsoft. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.