GM Financing Unit Slips; Other Subsidiaries Gain
Rising interest costs cut second-quarter earnings at General Motors Corp.'s financing subsidiary, while the auto maker’s two other major subsidiaries reported increases for the period, the companies said Wednesday.
Sales of communications satellite services pushed earnings to new highs at GM Hughes Electronics Corp. Demand for data-processing services by banks and other customers boosted results at Electronic Data Systems Corp.
The parent company’s earnings report was expected today.
The finance subsidiary, General Motors Acceptance Corp., said net income from its financing, insurance and mortgage operations was $268.6 million for the three months ended June 30, nearly a 20% drop from $333.9 million in the second quarter of 1988.
GMAC said its financing and leasing business in the United States increased 27% in volume from the earlier period, but interest costs soared. The company said its average cost of borrowings worldwide was 9.53% for the quarter, up from 7.94% a year earlier.
GMAC had total assets of $102.8 billion June 30, up from $99.9 billion a year earlier, spokesman John Andrews said.
GM Hughes Electronics said its telecommunications growth included sales of satellite services to three operations: a joint venture of HBO and Turner Broadcasting System; ESPN, the nation’s largest cable network, and CBS.
Hughes also said continuing cost-reduction efforts at Hughes Aircraft Co. and Delco Electronics contributed to the improvement.
The company reported second-quarter earnings of $240 million, up from $180 million in the second quarter of 1988.
The second-quarter earnings a year earlier were boosted by one-time gains from stock sales. Earnings from operations comparable to 1989 would have been $180 million, spokesman Bruce McCristal said.
EDS said profit was $104.9 million on revenue of $1.38 billion, up from $95.7 million on revenue of $1.20 billion a year ago.