John Devine, CFO of General Motors

This is a partial transcript from Your World with Neil Cavuto, July 16, 2002, that was edited for clarity. Click here for complete access to all of Neil Cavuto's CEO interviews.

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NEIL CAVUTO, HOST: Behind the wheel… General Motors, the world's largest auto maker, saw its profits nearly triple in the latest quarter. GM's earnings outstripping Street estimates as sales topped $48 billion. Investors are hitting the brakes on GM's stock despite the solid earning. It's down 31 percent in two months.

Well, earlier I spoke to John Devine. He's the CFO at GM, and I asked him if he's frustrated by the market's lousy reaction to good news like his.

JOHN DEVINE, CFO, GENERAL MOTORS: Sure, it is frustrating, but most of us have been around for a long time. This is a market we probably haven't seen before, but we have seen enough of it. I think you can't manage in the short-term. It is what it is. We have to perform. Our focus is on the business. Our financial results, affixing our balance sheet, that is where we are, and that's what we have to do. And if we do it over time, we are confident the stock price is going to follow.

CAVUTO: Alan Greenspan says inflation is not a problem, and you see it probably in just the way you sell cars and trucks. You get them off of the lot, but it really pinches your bottom line with all these discounts, does it not?

DEVINE: Well, sure. Incentives are expensive. But the second quarter is a good indication of North America. Our profit was up substantially. Our margins were actually up a bit despite pretty substantial incentives. The way we have done it is very simple: sell the right products, sell the right mix of products and get cost up, both fixed cost and variable cost. And that combination workforce in the first quarter worked again in the second quarter. We expect to continue it. So we're going to be aggressive in the marketplace. We think that is what customers want. But we are also going to deliver the financial results, that's what our shareholders want, and we are focused on both.

CAVUTO: Now I notice Hughes Electronics kind of had the same loss as last year. Do you give one eye towards where things stand with EchoStar at this point, or is that just sort of an ongoing soap opera you can't get sidetracked with?

DEVINE: Well, it is something we watch on a daily basis. We think we are making progress. We are obviously spending a lot of time with the DOJ and the SEC, as you would expect. Those discussions are continuing. This is a deal that when we announced we knew was not going to be an easy one to do. It's still not easy. But we expect to get it done. We expect to get it done by the end of the year.

CAVUTO: So by the end of the year, you are saying?


CAVUTO: OK… it sounds like I'm being very parochial here, John, but if it doesn't, do you revisit Rupert Murdoch?

DEVINE: It's hard to speculate. Our focus right now is getting this one done. We are confident it's going to get done, that is really where all our energy is. We are not spending a lot of time thinking about what-ifs.

CAVUTO: Finally, on this issue of corporate accountability and all of that, Mr. Greenspan… thought it would be in companies' best interest to expense options. You know he didn't want to legislate that issue. I'm making a lot of those inferences, John. So what do you make of that? That maybe it would be in the companies' best interest to go ahead expense it?

DEVINE: This issue on options has a lot of tails on it, as you know. The number one tail is what is the value? And how does that value change from quarter to quarter, and year to year? Obviously, we are very focused on being transparent and open to our investors. It is very important to us. But it is not an absolute black and white case on the options story. Obviously, we are going to do what we have to. The issue is not, I think, on options. The real issue is what do we, in the business community, have to do to restore confidence among the investors and among the average person on the street? That's the area that we have to focus on. I think the legislation coming out of Washington will certainly help. From our standpoint, it can't happen soon enough.

CAVUTO: But do you worry that they are overdoing it? That maybe they're going to legislate away to the point of just setting up whole new layers of bureaucracy to watch this?

DEVINE: Well, there is always a risk of that, as we all know. We have lived through some of this in the past. But our issue is restoring confidence, get it done, get it behind us, so frankly companies like General Motors can perform, and that performance can be seen in the marketplace and investors are prepared to invest. That's what we have to do. We have to get it behind us in our mind as quickly as we can, quit the debate, don't talk about it forever, do it. And then we will proceed with it. But I think this confidence issue we have to get behind us. In the meantime, our focus is real simple: get the job done at General Motors, perform for the consumer and for the shareholder. And as I said, if we do that over time, we think we will get rewarded.

CAVUTO: All right, John Devine, the CFO of General Motors.

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