AFSCME 3357-HOF'S BLOG

Delphi loses 1/2 Billion Dollars in First Quarter

Chapter 11 denizen, Delphi Corp., announced that it lost $533 million in the first quarter of 2007, up from a $363 million loss in Q1 last year. Per the Detroit News, $73 million was employee termination expense.

The large Delphi losses come at a time where Delphi's former parent and largest customer, General Motors, has fought hard to get to the break-even point, reporting a statistically insignificant $62 million profit in the first quarter. GM's profit of $395 million from the sale of its Suzuki stake was mostly offset by a $305 million charge due to bad subprime loans at GMAC.

It's hard to see how the bankruptcy court judge will allow Delphi to post losses at the rate of $2 billion per year without a concrete plan for survival. I also don't know who's bearing the loss for the current losses, since Delphi was already bankrupt in the first place. Look for all the creditors (except GM) to revolt any quarter now. GM no doubt benefits by having these loses on Delphi's books rather than GM's. If the losses eventually come to rest upon GM's shoulder's, that's going to be a hard blow for the general to overcome.