The debt crisis in Europe is "more serious" than the housing bubble in 2008 that came before a global recession, CEO Dan Akerson of General Motors Co. said in an interview with the Detroit Economic Club on Tuesday. The company has not achieved an annual profit in the region for more than 10 years already. It has declined in New York trading since it withdrew its goal for break-even results in the region.
The company's operations in this region lost $292 million before interest and taxes during the quarter ending September 30, GM disclosed last week.
Specifically, it posted a 2.5 percent decline in third-quarter net income. Analysts have slashed their forecasts for the adjusted earnings of GM in the fourth quarter by 49 percent following the company's announcement last week that results for the period would be similar to the same period last year. Weakness in the European region was identified as a factor. Akerson stated that they were "dealt a hand" and they must "play it as best as we can."
When asked if some countries may eventually leave the eurozone, leading to a breakdown of the currency, Akerson said that he "wouldn't doubt it." He added that he would not be surprised to see a two-tier system. GM stock has declined 34 percent since its initial public offering last year. [source: Bloomberg]