GM reports big profit; CEO says he'll step down

DETROIT - General Motors Co. said Thursday that it made $1.33 billion in the second quarter, a sign it is getting healthier as it prepares to sell stock to the public. The results were strong enough that chief executive officer Ed Whitacre announced he will step down next month, saying his job is done.

It was the second straight quarterly profit for the Detroit automaker, which made $865 million in the first quarter, and sets the stage for GM to file paperwork to start the public stock sale process.

Whitacre said last week that the company is eager to sell shares in an initial public offering so it can end its dependence on the government and pay off $43.3 billion in bailout funds that were converted into a majority stake in the company. Whitacre wants the company to shed the "Government Motors" moniker that is hurting sales and the company's image.

But it's unclear whether the recent record of profits - $2.2 billion for the first half of 2010 - is enough to convince investors. GM lost $88 billion in the five years before it filed for bankruptcy protection last June.

Although GM is performing well now, the timing still isn't right for it to sell shares in the next few months because of the sputtering economy, said Scott Sweet, senior managing partner of IPO Boutique, which advises investors on IPOs.

Several recent IPOs have been postponed because of concerns that they won't get a high enough share price, he said. He also said the Obama administration is pressuring GM to sell prematurely to influence the November congressional elections.

Last week, Whitacre said the elections are not being considered, and the government has repeatedly said GM is in charge of the sale timing.

The quarterly results were good enough for Whitacre. The 68-year-old Texan said he will step down as CEO Sept. 1 and turn the job over to board member Daniel Akerson. Like Whitacre, Akerson has experience turning around telecommunications companies. Akerson has been on GM's board for a year.

"I believe we've accomplished what we set out to do," Whitacre said.

GM's second-quarter revenue totaled $33.2 billion, up 5.3 percent from the first quarter. Its North American unit, long a source of losses, has turned into a profit machine, making $1.59 billion before interest and taxes in the second quarter, up 31 percent from the first quarter.

Profits from its international operations, which include China and Brazil but exclude Europe, dropped 42 percent to $672 million, and GM lost $160 million in Europe.

Much of the North American profit came because it is getting higher prices for cars, trucks, and crossovers. For example, GM said buyers paid 11 percent more, or $3,000 on average, for crossovers than they did in the second quarter of last year. Crossovers look like sport-utility vehicles but are based on car undercarriages.

GM said it earned $2.55 per share for the quarter. It didn't report second-quarter results last year because it spent part of the quarter in bankruptcy protection, but on Thursday, GM said it lost $12.9 billion in the second quarter of 2009, or $21.12 per share.

GM was the last of the Detroit automakers to report second-quarter results. Ford Motor Co. made $2.6 billion, its fifth straight quarterly profit. Chrysler Group L.L.C., which got $15.5 billion in federal aid, narrowed its second-quarter loss to $172 million.