DETROIT (Associated Press)- General Motors Co. rode expense cuts from its bankruptcy and strong sales of redesigned models to its first quarterly net income in nearly three years, drawing the company closer to a stock offering that would repay at least part of its government aid.

The $865 million first-quarter profit is a dramatic reversal from the huge $6 billion loss in the same period last year. The last time the company made a quarterly profit was the second quarter of 2007, when it earned $891 million.

The Detroit automaker said it made money because debt and other expenses were slashed by its stay in bankruptcy court and because of strong new-model sales. It also generated higher revenue from growth in Asia and South America.

The earnings of $1.66 per share from January through March are stunningly different from the first quarter of last year, when the largest U.S. automaker lost $9.78 per share as it skidded into bankruptcy protection.

First-quarter revenue soared 40% to $31.5 billion.

GM lost $3.4 billion in the fourth quarter of 2009 on revenues of $32.3 billion, the company's first full quarter out of bankruptcy protection.

Chief Financial Officer Chris Liddell was said it may be difficult to sustain the same level of profit for the remainder of the year because first-quarter production is usually higher than other quarters, with automakers ramping up for the spring selling season.

"I'd still be reasonably cautious about the rest of the year," he said.

New models such as the Chevrolet Equinox small sport utility vehicle and the Buick LaCrosse luxury sedan lifted GM's North American operations to a $1.2 billion profit, compared with a $3.4 billion loss in the year-earlier quarter. North America had been a continual drain on GM's profits before its bankruptcy filing last year.

CEO Ed Whitacre has predicted a full-year profit as U.S. auto sales continue their slow recovery. That could lead to a public stock offering late in the year and full repayment of the $50 billion in U.S. government aid that stopped GM from going under last year. The U.S. government now owns 61% of the company.

IPO?
Liddell said the company hasn't committed to any date for a public stock offering. GM has said, however, that it hopes to make an initial public stock offering late this year.

In bankrutpcy court, GM was split into two companies, the old one carrying unprofitable assets and much of its debt, while the new one moved forward with a much stronger balance sheet. Based on the trading price of Old GM's bonds, the U.S. government could get back $40 billion, former Obama administration auto czar Steven Rattner said last week.

Also on Monday, GM said it paid $203 million in dividends to its preferred stockholders, the U.S. and Canadian governments and a United Auto Workers union retiree health care trust.

GM has lost more than $86 billion since 2005, even though it had a few profitable quarters along the way. Before heading into bankruptcy protection last year it had almost $53 billion in debt, a number that was reduced to $14 billion last quarter.

The automaker has repaid about $6.7 million to the U.S. government, and the Obama administration hopes to get the remaining $43 billion by selling its 61% stake in the country's largest automaker.

The remaining balance on the government aid tab isn't considered debt since it was converted to equity in the company.

GM, once a symbol of U.S. industrial might, would have disappeared late in 2008 or early last year without help from the government. The company cut 10,000 workers last quarter and now employs 205,000 people across the globe, including 77,000 in the United States.

The company has cut worldwide employment by nearly half in the past decade.