Who needs global capabilities when one market is the source of 76.5% of company profits?

General Motors Corp.'s home turf led the automaker to another quarterly record — this time for July-September, as the company posted an all-time third quarter high earnings of $1.33 per share. GM's worldwide income totaled $877 million, up from a strike-impacted net loss of $309 million year-ago.

General Motors 2nd Qtr Financial Results
1999 1998 % Chg.
Sales $42,794 $33,525 27.2
Net Income $877 ($309) 208.4
Earnings Per Share $1.33 ($0.52) 355.8
Unit Sales* 2,049 1,821 12.5
Note: Dollar sales and net income stated in millions; unit sales in thousands. E/S is earnings per share.
*Unit sales are worldwide wholesale deliveries.

In North America, income hit $671 million, compared to year-ago's strike-affected $595 million loss. Despite four straight financially strong quarters, the automaker still gets little respect from Wall Street. And it won't until it establishes a better track record, admits GM Chief Financial Officer J. Michael Losh.

“There was a lot of our recent history where we did not earn our cost to capital. But as we post (return on net assets) over 12.5%, we are clearly exceeding our cost to capital. And that's what people on Wall Street are looking for,” says Mr. Losh, noting GM's RONA over the last four quarters is 14.2%.

GM North America's profit margin hit 2.4%, the first time it has missed its 5% goal since it posted a net margin loss of 3.1% year-ago.

In Europe, income slipped from $50 million in like-1998 to $32 million, a figure Mr. Losh believes will be respectable compared to at least some competitors. “The volume in total is quite good. However, the European market has tended to switch to a lower end product mix that puts pressure on all of us. And it's been characterized by extremely aggressive price competition,” Mr. Losh explains.

GM operations in Asia/Pacific lost $54 million after breaking even there year-ago. But there are isolated areas in the region — namely China and Thailand — that are on the comeback trail, Mr. Losh points out.

The strong quarter held GM's position at $16.7 billion, which will allow the company to continue a stock repurchase program and invest in facilities and machinery. Mr. Losh says GM's annual capital expenditures total $8 billion. “There's a lot of specific product programs and facilities improvements,” says Mr. Losh, who expects more such investments to “be announced in due time.”