DETROIT (Reuters) -- After nixing a three-way alliance with Renault-Nissan, the pressure is on General Motors to post quarterly results that deliver on the promise of its go-it-alone turnaround strategy, analysts said today.GM CEO Rick Wagoner on Wednesday, Oct. 4, called GM's progress to date this year "well ahead of what the skeptics thought possible" in explaining the reason for breaking off talks with Renault SA and Nissan Motor Co.Wagoner's buoyant assessment of the automaker's restructuring raised expectations that GM was on track to report a significant improvement in third quarter results later this month."Our read is that GM management probably presented solid, preliminary third quarter results to its board ... and had built enough credibility with its board to make the case for going it alone," Bear Stearns analyst Peter Nesvold said. "In short, a solid third quarter report from GM is likely in store."GM, which lost $10.6 billion last year, reports third-quarter results on Oct 25.The Renault-Nissan deal had been urged by GM's biggest individual shareholder Kirk Kerkorian, who has a 9.9-percent stake in the automaker and whose personal representative Jerry York sits on the board.But GM's board voted unanimously to walk away from the deal this week, fueling speculation that Wagoner had won York over for now with evidence of solid financial gains."One could take this unanimous vote as a signal that GM's board remains committed to the current management team and is likely pleased with recent profit improvements and the company's future prospects," Calyon Securities analyst Joseph Amaturo said in a note to clients.Amaturo sees a number of positives for GM in the second half of the year, including the fact that most of its cost-savings will start to be reflected in the third and fourth quarters."This, coupled with reasonable production volumes and higher average transaction prices in North America, should lead to meaningful year-over-year improvements," said Amaturo, who expects GM to post an operating profit of $1.45 per share in the third quarter.That is well beyond the average analyst estimate of 40 cents per share for the quarter, according to Reuters Estimates .But GM has so far surpassed Wall Street estimates this year by posting operating earnings of $2.30 per share for the first half, excluding charges. That compares to a consensus expectation of just 9 cents per share for the two quarters combined.Since January, GM has quieted critics by quickly executing most of it turnaround goals, including cutting 35,000 factory jobs and selling assets, moves Wagoner credits for helping drive a 70 percent gain in GM stock since the start of the year.GM also surprised investors by raising its cost-cutting target by $1 billion to $6 billion by the end of 2006.The automaker has also yet to realize big benefits from two as-yet unresolved issues surrounding former subsidiary Delphi Corp. and its finance arm, GMAC.Wagoner said on Wednesday that he was focused on completing talks with bankrupt former parts maker Delphi and its unions. But analysts say the threat of a strike at the parts maker, once seen as a major risk to GM, is now relatively low.GM is on track to close the sale of a majority stake in GMAC, a transaction that is expected to bring in about $11 billion to the parent company and lower the cost of GMAC's funding.But some analysts question if GM's momentum can be sustained once steps already taken in its restructuring are fully reflected in results.High material costs and weakening demand for large SUVs and pickups remain a risk for GM, which relies on light trucks for 60 percent of sales.Deutsche Bank analyst Rod Lache said he remains cautious on GM. "That said, we do not anticipate seeing evidence of a negative turn at GM until mid-'07," he said.
