GM Says It's Running Out of Money

DETROIT — The financial crisis at General Motors continues to worsen, as the company reported an operating loss of $4.2 billion in the third quarter and said its cash burn rate was $2.3 billion a month during the quarter.

GM burned through $6.9 billion during the quarter, as its cash reserves plunged to $16.2 billion at the end of September. In a startling admission of just how much its financial condition has weakened, GM said that "estimated liquidity during the remainder of 2008 will approach the minimum amount necessary to operate its business."

In other words, GM is rapidly running out of money. Analysts estimate that a company of GM's size needs to keep at least $10 billion on hand to meet its daily operating expenses.

GM said that after adjustments for special items, including one-time expenses and allowances, its net loss for the quarter was $2.5 billion. A year ago, GM rewrote the record books with a staggering $42.5-billion loss in the third quarter, including a one-time writedown of $38.3 billion in unused tax credits.

Global revenue dropped to $37.9 billion, from $43.7 billion a year earlier.

Adjusted losses on automotive operations totaled $2.8 billion, including pretax losses of $2.3 billion in North America and $975 million in Europe. Asia-Pacific operations essentially broke even. The one bright spot in GM's business was Latin America, where profits totaled $514 million (the figure includes Africa and the Middle East).

Inside Line says: The picture is much clearer at GM than Ford: GM will almost certainly run out of money, without a handout from Washington. — Paul Lienert, Correspondent