GM Possibly Selling GMAC
After reading a headline on the WSJ homepage about GM considering a sale of their stake in the GMAC unit, I found another article with more info at Bloomberg.
According to GM’s 2004 10-K filing, the GMAC division was responsible for $2.9 billion in net income. That’s “billion,” with a “b.” In the filing for GM’s Q2 10-q, it lists the net income for the first six months of 2005 from GMAC at $1.6 billion. Both of these are occuring on GMAC revenues of $31.1 billion and $16.5 billion, respectively. Now, let’s do a little math….
For net income of $2.9 billion against $31.1 billion of revenue for 2004, GMAC provided a profit margin of 9.3%. And looking at the first six months of 2005, GMAC provided a profit margin of 9.6%, with revenues of $16.5 billion and net income being $1.6 billion.
Call me crazy, but I’m thinking in these times, a profit ratio of nearly 10% is pretty dang good. As a business owner, I would have a tough time justifying the need to spin off a division that made profits like that. Of course, this would assume that profit margin won’t be hurt by the downgrade of GM bonds that happened earlier this year, but I guess we’ll find that out later. For now, let’s just get some popcorn and watch the show as the domestic automakers continue to provide business entertainment
