How does an $11.85 billion loss sound?
That's roughly what General Motors would have lost in 2005 if it already had sold 51 percent of its captive lender, General Motors Acceptance Corp.
GM lost $10.57 billion in 2005, even with the $2.5 billion it received from profitable GMAC. Cut GMAC's contribution by 51 percent and GM would get $1.28 billion less - bumping up its loss by that amount.
A consortium led by Cerberus Capital Management agreed to buy 51 percent of the lender for about $14 billion. That could improve GMAC's credit rating and its margin on loans.
But GMAC has been the major contributor to GM profits, and that makes Wall Street nervous. In a research note last week, Merrill Lynch analyst John Murphy called the deal "a tremendous drain on GM's earnings power." Over the last three years GMAC added an average of $2.8 billion to GM's net income, while automotive operations lost an average of $1.8 billion, he wrote.
The deal, in Murphy's view, "puts even more pressure on management to execute a turnaround in the core automotive business."