GENERAL MOTORS IS CLOSING THE OLDSMOBILE DIVISION!!!

DETROIT (Dec. 12) - In another sign of trouble among Detroit automakers, General Motors Corp. Tuesday said it would phase out Oldsmobile, America's oldest automotive brand, cut nearly 4 percent of its worldwide work force and warned that it would miss profit forecasts.

GM, the world's largest automaker, also said it will close an engine plant in Lansing, Michigan, and a passenger car production plant in Luton, England in an effort to slash costs as vehicle sales show signs of slowing in its key U.S. and European markets. All told, the company plans to cut more than 16,000 jobs in the United States and Europe.

The sweeping cuts announced by new Chief Executive Rick Wagoner from GM's world headquarters in Detroit is the latest blow for the U.S. economy from the auto industry. Both DaimlerChrysler AG and Ford Motor Co. had previously warned of lower profits, and all three major U.S. automakers had slashed production schedules.

The decision to drop the Oldsmobile brand over the next few years was the most difficult decision GM faced, Wagoner said.

"Over the years, it's truly been one of the crown jewels in the General Motors empire. However, Oldsmobile has been under increasing pressure for over a decade as demographics and segmentation of the market has changed," he said.

Wagoner said GM now expected fourth-quarter earnings per share would be only $1.10-$1.20, down from previous analyst expectations of $1.70 a share.

GM also lowered its earnings expectations for the full year to between $8.47 and $8.57 per share from previous analyst expectations of $9.02.

The new earnings forecasts exclude an after-tax charge of $900 million to $1.5 billion, or about $1.60-$2.75 per share -- $1.5 to $2.5 billion before taxes -- to cover costs associated with the phase-out of Oldsmobile and the job cuts.

GAIN SEEN ON SALE OF SATELLITE UNIT

The company also said it expects to report a fourth-quarter after-tax gain on the previously announced sale of a Hughes Satellite unit to Boeing Co. for $1.2 billion.

GM's share price was up $1-3/16 at $52-3/4 on the New York Stock Exchange in early afternoon trading, slightly above its year low of $48-7/16 and compared with a year high of $94-5/8.

To cut costs, GM will trim its North American white-collar workforce by 10 percent or about 5,000 jobs through attrition and early retirement packages. Another 1,100 contractors will also lose their jobs. In addition, the closure of the Delta Engine plant in Lansing will affect about 900 unionized workers. Previously announced cuts in production at its Saturn vehicle plants in Spring Hill, Tenn. and Wilmington, Del. will also trim the job rolls.

In Europe, GM will cut 5,000 jobs, including 2,000 from the closure of the Luton car plant, and through the elimination of about 1,600 white-collar jobs.

The closure of Luton, coupled with the previously announced conversion of its Russelheim, Germany plant, will cut GM's vehicle production capacity in Europe by 400,000 units.

Despite the cuts in Europe, GM said European automotive operations will have "significantly greater" losses in the fourth quarter than the $181 million loss in the third quarter.

In phasing out Oldsmobile, GM is relegating to the history books one of the most venerable brands in the automotive industry. Oldsmobile was founded in 1897 by Ransom E. Olds in Lansing, Michigan, and quickly became a favorite at the turn of the century with the Oldsmobile Curved Dash, one of the first mass produced cars. U.S. sales peaked at over one million in 1985 with the success of the Cutlass and the 88.

GM had invested $4 to $5 billion to revamp the Oldsmobile lineup over the past five years to make it more appealing to younger buyers, including the introduction of the Alero small car and the Aurora sedan.

But the brand still suffers a holdover image of making gas-guzzling cars for older people, and U.S. sales this year are expected fall to their lowest level in more than four decades, despite hefty consumer incentives. The division has been losing money for years, said Ron Zarrella, head of GM's North American automotive operations.

Oldsmobile is the second historic U.S. car brand to be phased out in the past year. DaimlerChrysler last year announced plans to kill the Plymouth brand, which was created in 1928 to battle Ford in the economy car segment.