Increasing Demand Helps Gm In Second Quarter

Sat., July 13, 1996

From Wire Reports

General Motors Corp. will post stronger second-quarter earnings because of improved demand and higher production levels worldwide, analysts said.

The world’s largest automaker will earn $2.51 a share in the quarter, according to a survey of 18 analysts by First Call Corp. That compares with earnings in the year-ago period of $2.3 billion, or $2.39 a share.

The improved earnings reflect GM’s higher output of cars and trucks worldwide amid stronger demand in many markets. In North America, GM production rose about 1.3 percent to make up for some of the 240,000 cars and trucks that weren’t built because of a strike by GM brake plant workers in Dayton, Ohio, in March.

“My own feeling is that if GM hadn’t had the strike and hadn’t crammed all that strike-related production in the quarter they would be down (in earnings) maybe 10 to 15 percent” in the second quarter, said Burnham Securities analyst David Healy.

The automaker will release its earnings Tuesday. The company’s Hughes Electronics Corp. subsidiary will release earnings Monday.

GM produced about 2.19 million cars and trucks worldwide in the second quarter, compared with 2.14 in the year-earlier period, Healy said. The production numbers are important because automakers book a sale after a vehicle has left the factory, often before it is sold by a dealer. Production also is usually more efficient at higher volumes.

In North America, output rose to 1.54 million vehicles from 1.52 million the year before. GM substantially boosted production of its sport utility vehicles, including the Suburban, Tahoe and Yukon, which were in especially short supply after the strike. “They had a slightly richer mix because the kinds of things they were replacing were the high-profit models, like sport utility vehicles,” said Nicholas Lobaccaro, a Bear Stearns analyst.

Some of the stocks that moved substantially or traded heavily Friday on the New York Stock Exchange, Nasdaq Stock Market, and American Stock Exchange.

NYSE

Chrysler, down 1-1/4 at 56-1/4

The automaker’s second-quarter earnings rose to $1.04 billion, or $2.77 a share, slightly exceeding analyst expectations. Sales increased 27 percent to $15.8 billion - a record for any quarter - from $12.52 billion. It was the third best quarterly profit ever for Chrysler.

United HealthCare, up 2-1/8 at 33-1/8

The stock rebounded slightly from Thursday’s 30 percent sell-off on a negative earnings outlook.

NASDAQ

American Toys, up 1-1/2 at 4-1/4

The company’s board authorized the spinoff of its 66 percent stake in Play Co. Toys & Entertainment. Also Thursday, American Toys said it plans to acquire 51% of Labyrinth Communication Technology Group for cash and stock and change its name to U.S. Wireless Corp. Labyrinth is a development stage company working on wireless communications technology.

MDT, up 1 at 5-5/16

Sweden’s Getinge Industrier, a medical technology group, raised its bid for MDT to $5.50 a share. Heartland Advisors, which holds a 19.8 percent interest in MDT, has backed the new offer, assuring Getinge of at least a 60.4 percent stake. Getinge originally offered $4.50 a share for MDT, but didn’t manage to convince all shareholders to tender at that price.

Premiere Technologies, up 2-3/4 at 21-1/4

The computer telecommunications company terminated plans to file for a public offering of 3.5 million common shares, citing current market prices. Premiere said it plans to evaluate its options again if market conditions improve.

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