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GM GIVES NEW HOPE TO GLOOMY OUTLOOK

General Motors posts its third straight profitable quarter.

For a time, it looked as though Detroit's three automakers could do no right, losing billions while cranking out inefficient trucks just as gas prices rose above $3 per gallon.

But recent quarterly profits by General Motors Corp. and Ford Motor Co. have given the Motor City a little hope that better days are ahead, even though both companies made most of their money overseas.

Of course, good news could be bad news in the auto industry, where companies are hashing out a new contract with their hourly workers.

On Tuesday, GM ran its string of profitable quarters to three when it announced second-quarter net income of $891-million.

Earnings growth in Europe, Latin America, Asia and other areas eclipsed lingering problems in North America. Although GM improved in its back yard, it still posted a net loss of $39-million here.

Last week, Ford posted its first quarterly profit in two years at $750-million but warned it hadn't turned the corner to sustained profitability. Chrysler Group's second-quarter earnings results have been delayed until this month by the pending sale of 80.1 percent of the company to Cerberus Capital Management LP.

The second-quarter profits come on the heels of the formal start to contract talks with the United Auto Workers, although analysts say the companies can point to losses in North America to show the need for concessions.

Several industry analysts said that while signs of trouble remain at both Ford and GM, the profits are still good news.

"I think it's brightening up," said David Healy, an analyst with Burnham Securities. "Both companies have shrunk about one-third of their hourly work force and they've closed a lot of plants. They're ... adjusting to the level of business that they're doing now."

Peter Nesvold, an analyst for Bear, Stearns & Co., said Detroit is starting to see the results of changes in product lineups due to higher gas prices and competition from Japanese automakers.

"It's been responding, albeit late, to the shift in consumer preference and the ongoing competitive threat from the new domestics," he said.

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