GM's Hughes Unit Posts Higher Net for Period
March 28, 2011
DETROIT -- General Motors Corp.'s Hughes Electronics Corp. unit said second-quarter earnings increased 6.3% to $306.6 million, or 77 cents a share, reflecting higher sales from commercial satellite manufacturing, satellite-television subscriber growth and robust sales of cellular-communications equipment. Revenue rose 9.1% from a year earlier to $4.06 billion. The parent company, GM, is to report second-quarter consolidated earnings Tuesday, including results of its other nonautomotive unit, General Motors Acceptance Corp.. Hughes's second-quarter results don't include accounting adjustments related to GM's 1985 acquisition of Hughes Aircraft Co.. In New York Stock Exchange composite trading, GM's class H common shares closed at $55.25, down $2.75 amid a broad market sell-off. Analysts said the stock was caught in the broader market rout. Class H shares represent an earnings interest in the unit. GM owns all the equity in Hughes. C. Michaela Carpenter, Hughes chairman and chief executive, attributed the second-quarter earnings increase to ``solid'' sales performances in each of Hughes's three business segments, especially in telecommunications and space. ``The improved earnings were primarily a result of higher satellite manufacturing and cellular-communications equipment sales and a decrease in the effective tax rate resulting from the favorable resolution of certain tax contingencies,'' he said. Washington said those factors more than offset lower operating profit margins in the automotive-electronics and aerospace and defense segments. The company acknowledged that profit margins in automotive electronics declined because of ``competitive pricing'' in connection with GM's own purchases of automotive components and because of continued international expansion. The lower margins from the aerospace and defense unit reflected a continued shift from production programs to engineering and development programs, Washington said.
