GM posts $1.33B profit in 2nd quarter

August 13, 2010 at 12:00a.m.

Associated Press

DETROIT

General Motors Co. said Thursday it made $1.33 billion in the second quarter, a sign it’s getting healthier as it prepares to sell stock to the public. The results were strong enough that CEO Ed Whitacre announced he will step down next month, saying his job is done.

It was the second-straight quarterly profit for the Detroit automaker, which made $865 million in the first quarter, and sets the stage for GM to file paperwork soon to start the public-stock sale process.

Whitacre said last week that the company is eager to sell shares in an initial public offering so it can end its dependence on the government and pay off $43.3 billion in bailout funds that were converted into a majority stake in the company. Whitacre wants the company to shed its “Government Motors” moniker because it’s hurting sales and the company’s image.

But it’s unclear whether the recent record of profits — $2.2 billion for the first half of 2010 — is enough to convince investors. GM lost $88 billion in the five years before it filed for bankruptcy protection last June.

Although GM is performing well, the timing still isn’t right for it to sell shares in the next few months because of the sputtering economy, said Scott Sweet, senior managing partner of IPO Boutique in Tampa, Fla., which advises investors on IPOs.

Several recent IPOs have been postponed because of concerns that they won’t get a high-enough share price, he said. He also said the Obama administration is pressuring GM to sell prematurely to influence the November congressional elections. Last week, Whitacre said the elections are not being considered, and the government has repeatedly said GM is in charge of the sale timing.

“The numbers are good. You can’t argue that,” Sweet said. “There is a huge incentive to have an IPO of GM, but it also must work.”

The quarterly results were good enough for Whitacre. The 68-year-old Texan said he will step down as CEO Sept. 1 and turn the job over to board member Daniel Akerson.

GM’s second-quarter revenue totaled $33.2 billion, up 5.3 percent from the first quarter. In the U.S., GM saw strong sales of new and redesigned models such as the Chevrolet Equinox wagon and Buick LaCrosse sedan.

Its North American unit, long a source of losses, has turned into a profit machine, making $1.59 billion before interest and taxes in the second quarter, up 31 percent from the first quarter. Profits from its international operations, which include China and Brazil but exclude Europe, dropped 42 percent to $672 million, and GM lost $160 million in Europe.