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I think GM's restructuring needs restructuring. The company announced that it's taking a $39 billion noncash charge in the third quarter to remove net deferred tax assets from its books.

The NYT:

G.M. said the charge, which affects the automaker’s businesses in the United States, Germany and Canada, would have no impact on operations and would not interfere with efforts to restructure.

But analysts said the step reflected the likelihood that G.M. would not earn significant profits on its automotive or finance operations in the near future. The deferred assets could have been used to offset taxes on future profits.

“What this says right now is that, at least according to an accounting interpretation, the outlook for earnings in their U.S. business has diminished from where it was,” said John Casesa, an industry analyst with the Casesa Shapiro Group.

The charge is among the largest by the auto company and is the latest in a series of accounting steps at G.M. The company has revised its financial results often over the last few years as it has worked through a restructuring that began in 2005.

Let's run the numbers: $39 billion and GM has 565.9 million shares outstanding. The current Dow divisor is 0.123017848. So 39,000,000,000 divided by 565,900,000 divided by 0.123017848 equals roughly 560.

GM's charge is worth 560 Dow points.

Think about that.

Posted by edelfenbein at November 7, 2007 7:01 AM