General Motors (GM) and the analysts who cover the automaker all have egg on their faces. America's largest vehicle producer's fourth-quarter profit of $900 million missed estimates by a mile. Though some overseas markets are a concern, most of the shortfall stems from restructuring charges rather than a slump in business. But that's the sort of information that ought to have been known in advance.
Granted, there was a lot of noise in the Motown manufacturer's three-month results. It racked up $1.7 billion in total from one-off gains under a tax break, sales of stakes in Ally Financial and Peugeot and the resolution of wage litigation in Korea.
Sell-side stock pickers seem to have heard all that. Yet they blocked their ears to $1.9 billion of charges GM took as it closes down plants in Europe, Australia and elsewhere. New finance chief Chuck Stevens told reporters that analysts both "didn't comprehend that restructuring" and failed to account for an overall higher 2013 tax rate.
GM, though, has had several shots at keeping analysts up to date on its recovery efforts, including at an investor conference during the Detroit auto show last month. While the top brass, including new Chief Executive Mary Barra, did sound a cautious note, they were not clear enough.
Red faces aside, GM's quarter was not that bad. In fact, in North America it reported earnings before interest and taxes of $1.9 billion for the fourth quarter - 58 per cent higher than the same period in 2012. China was a disappointment, with its 7.6 per cent pre-tax margin coming in below the 9 percent or more of recent quarters. And emerging-market problems may further weaken already tepid earnings in Latin America and Asia.
GM is well prepared to deal with those issues. Its cash pile is increasing, and its US pension plans are now only 10 per cent underfunded. The challenge, it seems, is to communicate better - and get analysts to pay attention.
Granted, there was a lot of noise in the Motown manufacturer's three-month results. It racked up $1.7 billion in total from one-off gains under a tax break, sales of stakes in Ally Financial and Peugeot and the resolution of wage litigation in Korea.
Sell-side stock pickers seem to have heard all that. Yet they blocked their ears to $1.9 billion of charges GM took as it closes down plants in Europe, Australia and elsewhere. New finance chief Chuck Stevens told reporters that analysts both "didn't comprehend that restructuring" and failed to account for an overall higher 2013 tax rate.
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It's not the first time those covering the US car industry have missed some signals since the financial crisis. They ignored warnings Ford gave a couple of years back, for example.
GM, though, has had several shots at keeping analysts up to date on its recovery efforts, including at an investor conference during the Detroit auto show last month. While the top brass, including new Chief Executive Mary Barra, did sound a cautious note, they were not clear enough.
Red faces aside, GM's quarter was not that bad. In fact, in North America it reported earnings before interest and taxes of $1.9 billion for the fourth quarter - 58 per cent higher than the same period in 2012. China was a disappointment, with its 7.6 per cent pre-tax margin coming in below the 9 percent or more of recent quarters. And emerging-market problems may further weaken already tepid earnings in Latin America and Asia.
GM is well prepared to deal with those issues. Its cash pile is increasing, and its US pension plans are now only 10 per cent underfunded. The challenge, it seems, is to communicate better - and get analysts to pay attention.