The Growing Concern over "Going Concern"
In what may have been a gross understatement, General Motors CFO Ray Young summarized 2008 as "a tough year" in a conference call with investors last week. And its future certainly didn't look any brighter today, as Deloitte & Touche expressed its doubts that its carmaker-client will stay viable.
In the GM annual report filed today, the company carried the auditor opinion that GM had warned last week would be coming. "The corporation's recurring losses from operations, stockholders' deficit, and inability to generate sufficient cash flow to meet its obligations and sustain its operations raise substantial doubt about its ability to continue as a going concern," wrote Deloitte.
Even with GM's prediction of the Deloitte opinion, Thursday's news could not surprise followers of GM's many problems — including its request for more government bailout funds, closures of some of its brands, and the likelihood it'll burn through $14 billion in cash this year. These issues have been accelerated by poor car sales across the auto industry as consumers have cut back on spending. In his Q4 2008 conference call last week, Young acknowledged the likelihood of Deloitte's going-concern disclosure as well as his company's $30.9 billion loss for the year, a near-record annual loss, rivaled only by its 2007 loss of $38.7 billion.
