General Motors Co. is pointing to its European operations as a trouble spot as it reports lower earnings, and CFO Dann Ammann says the company "obviously [has] significant macroeconomic challenges to address there."The carmaker's Q3 profit slid to $1.73 billion, or $1.03 a share, from $1.96 billion, or $1.20 a share, although it still beat the 94-cent average of analysts polled by Bloomberg News. Revenues scored a rise of $2.6 billion in the quarter, to $36.7 billion.As the company was watching its stock price slide 8.1% in the morning, to $23.01, Ammann told a briefing with reporters in Detroit: "We've got good product and are well positioned in the marketplace. It's about getting paid for that product; it's about optimizing our mix of retail versus fleet sales."But GM's European operations lost $292 million, before interest and taxes in the quarter, and the company said now doesn't expect to break even on an Ebit basis before restructuring costs in Europe, its prior goal. It cited "deteriorating economic conditions."GM's overall Q4 results will be similar to a year earlier, when profit was 31 cents a share, it said, citing seasonal factors in North America and weakness in Europe. Bloomberg's tally of analysts showed that they were predicting 86 cents for the Dec. 30 quarter.'Worse than Expected'"We were worried about a Q4 guide-down relative to consensus, but this outlook appears worse than our own below-consensus estimates," Itay Michaeli, a New York-based analyst for Citigroup, said in a note to clients quoted by Bloomberg. "The weaker Q4 outlook will likely dominate attention today."One year after its initial public offering that followed its 2009 bankruptcy, GM is closing in on regaining the lead this year in global auto sales, despite the European problems. Worldwide sales climbed to 6.79 million this year through Sept. 30, exceeding Volkswagen AG's 6.16 million and Toyota Motor Corp.'s 5.77 million, according to data compiled by Bloomberg.GM increased production in North America as U.S. deliveries climbed 15 percent from a year earlier in the three months ended Sept. 30, Autodata Corp. numbers showed. CEO Dan Akerson has raised prices to offset higher costs for commodities and engineering as demand in GM's most profitable market recovers from a 27-year low.North America Earnings Up"In the face of a lot of headwinds from the global economy, GM continues to do pretty well," Channing Smith, a money manager at Capital Advisors in Tulsa, told Bloomberg before the earnings report. It manages about $900 million and holds GM shares. Smith added that consumers in the U.S. "are going to have to start buying cars again because the average age of cars on the road is very high, and fortunately GM has the right products now."GM's $2.19 billion earned in North America before interest and taxes was up 3.3%. Results reflected a shift to more sales of cars, such as the Chevrolet Cruze, which are less profitable than trucks. That reduced earnings in the region by $400 million, less than the $500 million predicted by analysts such as RBC Capital's Seth Weber, according to Bloomberg.International operations, which includes China, earned $365 million before interest and taxes while the South American business lost $44 million, GM said in its statement. It is introducing nine new models in South America during the next year to regain profitability in the region, which made $163 million in the same period last year. The company cut 4% of employees in South America, and, CFO Ammann said, will show lower costs going forward.'We Need to Do Better'Said Akerson: "We need to do a better job in Europe and South America. The results there are not sustainable and not acceptable. We will continue to work on reducing the break-even levels in those regions."GM's U.S. auto sales rose 15 percent through October this year, outpacing the industry's 10 percent gain, according to Woodcliff Lake, New Jersey-based Autodata. The automaker's market share improved to 19.8 percent from 19 percent a year earlier.GM plunged 32 percent this year through yesterday. The shortfall of the company's pensions has become a "primary area of focus for the investment community," Peter Nesvold, a New York-based analyst for Jefferies & Co., said yesterday in a phone interview.Underfunded PensionsGlobal pension plans for GM employees were underfunded by $22.2 billion at the end of 2010, including a $12.4 billion shortfall in the U.S., according the company's annual 10-K regulatory filing. While GM doesn't provide updated measures until year-end, Nesvold said he expected the company will provide some guidance on funding and investment returns.U.S. pensions were underfunded by $8.7 billion through Sept. 30, reflecting for the first time a $2 billion stock contribution made in January, Bloomberg quoted GM spokesman Jim Cain as saying. That was based on GM's valuation as of Dec. 30.Ammann said GM wouldn't give more details on the pension status until year-end. But GM's worldwide pensions may be underfunded by about $27 billion at year-end, one analyst has written in a Nov. 7 research note.