Nissan losses lower than expected   The world’s third largest carmaker, Nissan Motor Company (NSANY), posted a modest net loss of 9 cents (¥4.06) per share in the first quarter of fiscal 2009. The loss was largely driven by the slump in global car demand, negative impact of a stronger yen, sharp decline in consumer confidence in all the major markets and product mix deterioration. Reported losses were significantly lower than the Zacks consensus forecast of 80 cents. Cost-cutting efforts, coupled with the government stimulus, helped Nissan curb losses in the quarter. The government of US, Germany, Japan and China are offering consumers credits, tax breaks and subsidies for trading in old cars for new fuel-efficient models. However, we remain concerned about Nissan’s prospects as these government incentives will not be available for much longer. Operating costs shrunk 37% year over year to $25.2 billion ...

Nissan Motor Company (NSANY) manufactures and sells about 3.5 million cars and commercial vehicles annually in more than 190 countries. The company's major production sites are located in Japan, with additional facilities located in the U.S. and elsewhere. Some of its key brands include Altima, Sentra, Maxima, Quest, Pathfinder, Xterra, Frontier, Titan, and its luxury brand, Infiniti.

Increasing prices of energy and raw material including steel, aluminum and precious metal are eroding profits of Nissan. Moreover, the company is offering higher incentives to entice buyers. This is making it difficult for Nissan to pass on rising raw material and energy prices to the ultimate consumers.

In addition, there are concerns about the new product launch costs that the company is planning. Also, the overall automotive industry environment is a challenging one, with volumes going down.

The company anticipates a 29.5% drop in earnings for fiscal 2008. Thus, we rate the

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