General Motors Corp. reported $39 billion third-quarter losses last week. The news was received with dismay by investors and the company’s shares closed more than six percent lower. Yahoo News! has reported that a senior index analyst for Standard & Poor has said it was the second-worst quarterly net loss in U.S. corporate history, exceeded only by AOL Time Warner’s $44.9 billion loss in the fourth quarter of 2002.

The news of the loss follows a range of positive developments for General Motors. The automaker had recently reported three straight quarters of profitability, improved 2007 global sales resulting in the corporation regaining its position as the world’s top-selling automaker from Toyota Motor Corp. GM has also signed a key labour deal with the Union, United Auto Workers, which will save the company significant long term retiree health-care costs. (See blog entry on UAW’s strike at Ford.)

Some analysts seem to believe that the state of GM’s business is going from bad to worse. MarketWatch reported that Bear Stearns analyst Peter Nesvold said: “Fundamental pressures appear to be coming on even faster and stronger than we thought when we downgraded GM shares to underperform three weeks ago.”

Yahoo News! reports that others, like David Kudla, CEO of Mainstay Capital Management, are looking at the loss in a different light and setting it against the positive developments. He said, “International and emerging markets expansion has been very positive for the company, as it establishes a dominant position in large growing markets such as China and India.”

General Motors has explained that the $38.6 billion loss, relates to a non-cash charge due to accumulated deferred tax credits in the U.S., Canada and Germany. The company said slow earnings growth on its core North American automotive market and losses in its lending business, GMAC Financial Services (GM holds 49%) have both contributed to investors’ confidence being shaken.

Related links: General Motors Corporation- SWOT Analysis.