http://news.yahoo.com/s/nm/20051110/bs_nm/autos_gm_shares_dc

DETROIT (Reuters) - Shares of General Motors Corp. (NYSE:GM - news) fell more than 6 percent on Thursday, spiraling to a 23-year low, after Banc of America Securities warned of an increased risk of bankruptcy at the financially struggling auto giant.

The stock's decline -- which could add to pressure on Chairman and Chief Executive Rick Wagoner to launch a more aggressive revival plan for the automaker -- also came after it said late on Wednesday that it had overstated financial results for 2001 by as much as $400 million.

GM said the accounting error stemmed from the way it booked credits from suppliers. The accounting for credits from suppliers was one of the reasons GM was recently targeted for investigation by the
Securities and Exchange Commission, the company said.

In a note to clients, Banc of America analyst Ron Tadross said he was cutting his target price on GM to $16 from $18.

Citing "increasing evidence that hidden liabilities exceed hidden assets" at GM, Tadross also said he was raising its risk of bankruptcy over the next two years to 40 percent from 30 percent.

"Existing liquidity may only be enough to get through a bankruptcy reorganization," Tadross said.

GM shares were down $1.68, or 6.78 percent, at $22.96 in mid-morning trading on the New York Stock Exchange after falling to a 13-year low on Wednesday.

The Detroit-based Old Economy icon has lost about $3 billion this year as it grapples with high health-care and commodities costs, a steady erosion of U.S. market share and sputtering sales of big sport utility vehicles, its longtime cash cows, due to high gasoline prices.

Heh this sucks...stupid accountants.

Just pull a Chrysler "Lee Iacoca" already before another brand bites the dust! :angry:

Being that I work in the accounting industry (and have for 11 years), I can shed a little bit of light in this area. Actg firms woo large clients by showing them large cost savings that can be had by various accounting "strategies" (I've actually seen a pitch for one of the non-domestic automotive giants, promising tax savings of $110m/year) -- (they bit on that, btw). Basically, your actg firms were playing fast and loose with the rules, all in a race to pitch themselves to large companies. This is largely why we now have the Sarbannes-Oxley stuff.

Being that I work in the accounting industry (and have for 11 years), I can shed a little bit of light in this area.  Actg firms woo large clients by showing them large cost savings that can be had by various accounting "strategies" (I've actually seen a pitch for one of the non-domestic automotive giants, promising tax savings of $110m/year) -- (they bit on that, btw).  Basically, your actg firms were playing fast and loose with the rules, all in a race to pitch themselves to large companies.  This is largely why we now have the Sarbannes-Oxley stuff.

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Yup. He's right. Accounting is very subjective, and there are a lot of things firms can do "legitimately" to make themselves look better for investors or worse for tax breaks depending on the situation.

http://www.autonews.com/news.cms?newsId=13795

General Motors on Wednesday said it will restate its financial statements for 2001 because they were overstated by about $300 million to $400 million.

Accounting errors led to the wrong figures for net income from continuing operations, which were overstated by about 25 to 35 percent,

GM in its filing also said it will restate financial statements for periods after 2001 that may be affected by the erroneous accounting.

Ooops Oh yeah "Errors" Made the stock look good.
They were pounding out those huge dividends the whole time.

As far as GM is concerned, they were errors. The accounting firm is the one responsible for using deceptive and sneaky accounting "rules." Rules is a huge misnomer in accounting, though. It's more like "practices" because the rules are very bendable.

More bad news and more "ENCOURAGEMENT" for the destruction of GM An "Old Economy" giant <_< Because, you know, our new "SERVICE" (We service everyone :)) economy is ficticious...

:metal: :CG_all: :unsure: :o

*cautiously raises eyebrow*

Wait ... let me get this straight ... an accounting error has produced the most-recent problem at GM?

Hmm...if that's the case, is it possible that the "beancounters" have been wrong the last few years in dictating which vehicles are axed and which vehicles are produced by GM?

Hmph.

What _else_ could go wrong?


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Rick Wagoner is such a dumbass. He should be thrown in prison for his malfeasance.