GM warns chip shortage could cut 2021 earnings by up to $2 billion

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Analysts are calling it the worst semiconductor shortage in years. Why is there such a massive chip supply crunch happening now? CNBCJosh breaks it down.

GM's shares fell by 1.3% in premarket trading.

Adjusted earnings per share: $1.93 vs. $1.64 expected, based on average analysts' estimates compiled by Refinitiv.The company said it expects to earn $10 billion to $11 billion, or $4.50 to $5.25 per share, in adjusted pretax profits this year. It projects adjusted free cash flow of $1 billion to $2 billion for its automotive division in 2021. The forecasts factor in the potential impact of the chip shortage, including a hit of $1.5 billion to $2.5 billion to its free cash flow.

On an unadjusted basis, net income was $2.85 billion for the fourth quarter compared with a loss of $194 million. The automaker reported pretax adjusted earnings of $3.7 billion for the fourth quarter, up from $105 million a year earlier. The company expects to spend $9 billion to $10 billion in 2021. That includes plans to accelerate its all-electric and autonomous vehicle development and rollouts as well as deferred spending from last year due to the pandemic. GM previously said its annual capital expenditure costs would exceed $7 billion through at least 2023.

 

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Tesla has chips

Earnings or revenue?that is a whole lot of vehicles to generate $2 billion in earnings. (Cheaper chips are available & no one uses all those toys which can be upgraded later when GM recalls those vehicles later which they inevitable will.)

Ford has a ton of debt although a better buy. Tons of highly anticipated new models with long waiting lists to get them.

Josh 26 weeks if they're lucky + add the hoarding dimension. typically the best lead times are reserved for the best customers and many of those are distributors. can't even being to tell you how complex it gets after that RWMann

Josh The way my leaps are going to be up bigly when we get a handle on this shortage .... paytience!

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