growth and profitability

G.M.’s Profit Falls 14% as It Speaks of Progress

G.M., the nation’s largest automaker, said global revenue dropped 2 percent during the quarter to $36.9 billion, despite a concerted effort to introduce new models in the United States and Europe.

The automaker’s core North American operations achieved a pretax profit of $1.4 billion, a 14 percent decline from the year-ago period.

But the company beat analysts’ earnings expectations and said it had narrowed losses in Europe during the quarter. G.M. shares rose 3 percent to close at $31.16 on Thursday.

G.M. has struggled to rebuild its business since the recession, when it needed a $49.5 billion government bailout and bankruptcy to survive. The automaker has since cut brands, models and thousands of jobs to bring costs more in line with production and sales.

The company’s chief executive, Daniel F. Akerson, said the decline in earnings and revenue did not reflect the progress G.M. was making with new models in the marketplace.

“The year is off to a strong start as we increased our global share with strong new products that are attracting customers around the world,” Mr. Akerson said in a statement.

G.M. lost market share in the United States last year to competitors like Chrysler and Toyota. Mr. Akerson has vowed to reverse that trend this year with vehicles like the new Cadillac ATS sedan and restyled versions of its big pickup trucks.

Comparisons between G.M. and Ford offer a stark contrast in how the two biggest Detroit automakers are managing their global business. Ford, the smaller of the two, has surpassed G.M. in growth and profitability at home, while the situation is reversed in Europe.

In the first quarter, Ford earned an average of $3,200 in pretax profit on each of the 761,000 vehicles it sold in North America, while G.M. earned about $1,700 on the 829,000 cars and trucks it sold in the region.

But in Europe, Ford’s loss widened in the first quarter to $462 million. G.M. reduced its European losses by 40 percent to $175 million.

The hottest competition between the companies is in the expanding pickup market in the United States.

Ford said on Thursday that it would add 2,000 jobs this year at its truck plant in Kansas City, Mo., and add a third shift of workers to build its industry-leading F-series pickup.

G.M. is transitioning to new versions of its Chevrolet Silverado and GMC Sierra pickups. But G.M. executives said on Thursday that there were no plans to increase truck production because a pickup plant in Texas was already operating at less than capacity.

Mr. Akerson said G.M. had improved its accounting and regional framework to focus on more profitable vehicles and markets. The company is building more plants in China and is making a big push to increase sales of its Cadillac luxury brand.

“We’re a very healthy company that’s getting stronger each quarter,” he said in a call with analysts Thursday.

In Asia, the company said pretax profits were about $495 million, slightly less than a year ago. South American operations had a pretax loss of $38 million, in contrast to a profit of $153 million last year.

Article source: http://www.nytimes.com/2013/05/03/business/gms-quarterly-profit-falls-14.html?partner=rss&emc=rss

Cisco’s Profit Falls 36%

SAN FRANCISCO — Cisco Systems showed little sign of a turnaround in its latest quarter.

Cisco reported Wednesday that net income in the fourth quarter ended July 30 fell 36.3 percent to $1.2 billion, or 22 cents a share, from $1.9 billion, or 33 cents, in the same quarter a year ago.

The company said revenue climbed 3.3 percent to $11.2 billion, from $10.8 billion.

Weak spending by government agencies combined with slow decision-making has left Cisco adrift. But an overhaul that includes cutting more than 7,000 jobs and jettisoning products like the Flip video camera is expected to take time to lift the company’s results.

The company has long been considered a bellwether for technology spending, but its internal problems have made it a less reliable stand-in for the broader technology industry. Cisco makes routers and switches used by corporations and government agencies to operate data centers and telecommunications networks.

The adjusted income of 40 cents was above the expectations of Wall Street analysts. They had expected 38 cents a share and revenue of $10.98 billion on that basis, according to a survey of analysts by Thomson Reuters.

“We’ve made significant progress on our comprehensive action plan to position ourselves for our next stage of growth and profitability, while delivering solid financial results in Q4,” John T. Chambers, chief executive of Cisco, said in a statement. “As we start our next fiscal year, you will see a very focused, agile, lean and aggressive company, that is laser-focused on helping our customers use intelligent networks to transform their businesses.”

Cisco, based in San Jose, Calif., is trying to reverse its course after a nearly yearlong slump. The company has responded by cutting costs and overhauling its management structure to try to restore some its former glory. Last month, Cisco said it would cut 6,500 jobs through layoffs and buyouts along with selling a factory in Mexico. The company took a $772 million charge for the restructuring in the fourth quarter.

Those reductions come in addition to 550 jobs eliminated in April.

While Cisco struggled over the last year, smaller rivals like Juniper Networks performed relatively well. More recently, however, Juniper and Brocade Communications Systems, another maker of technology equipment, have warned of slumping demand for their products.

Cisco’s problems include a slowdown in spending by the public sector, which makes up around a fifth of its overall sales. Because of tight budgets, government agencies, public universities and hospitals are balking at buying big-ticket technology equipment, a situation that is not expected to change any time soon.

While Cisco’s main primary products face headwinds, some of its other businesses have shown strong growth in recent quarters, like phone systems, video conferencing and wireless products. Mr. Chambers is counting on these newer areas to lift the company as its more mature products make smaller gains.

But investors are focused on Cisco’s slow overall growth, and have sent the company’s shares down more than 40 percent over the last 12 months.

Shares of Cisco fell 33 cents, or 2.3 percent, to close at $13.73. They rose 41 cents, or 3.3 percent, in after-hours trading.

Article source: http://feeds.nytimes.com/click.phdo?i=b206003007c905a021c854c3d7de08cc

G.M.’s Profit Falls 14% as It Speaks of Progress

Cisco’s Profit Falls 36%

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