More Mortgage Co. Red Ink
"General Motors Corp.'s disclosures that it lost $2 billion more last year than previously reported and needs more time to sort out accounting errors in the finance business it wants to sell gave investors fresh reasons to worry about the world's biggest automaker. They sent GM's shares price down nearly 5 percent Friday, shaving more than a half-billion dollars off its market value. "
"GM said after the market closed Thursday that it now estimates it lost about $10.6 billion in 2005 compared with its preliminary report of a loss of $8.6 billion. The company also said it was delaying filing its annual report with the Securities and Exchange Commission for up to two weeks after uncovering accounting problems."
"GM said the accounting errors relate to transactions at ResCap, the residential mortgage subsidiary of its finance arm, General Motors Acceptance Corp. The company said the problems could affect earnings from prior years."
GM had mistakenly accounted for cash flows from the mortgage subsidiary ResCap. It would also restate results from 2000 to 2004 due to ResCap.
"The delay in filing the annual report and the disclosure of accounting errors "undermines management's credibility with investors," Morgan Stanley analyst Jonathan Steinmetz wrote in a research note. GM had stated last week that it would file its annual report on time, he noted."