GM Sales Toward Destruction?

Interesting column by The Motley Fool's Rich Smith on MSNBC.com:

Upwards of a year ago, when I first began penning a series of articles describing the dire financial straits facing Virginia mobile computer maker Xybernaut, I got an email from one confused reader who wondered: "How can Xybernaut not be a wonderful investment?" Quarter after quarter, year after year, the company had released a stream of press releases describing its increasing sales. And if a company is constantly selling more stuff, doesn't that mean it's in good shape?

The reply I gave then is the same answer I give to investors enthusiastic over the record-breaking sales that automaker General Motors is posting now: Increasing sales are not necessarily proof that a company is healthy. If the sales are unprofitable, the sales jump may just drive the company closer to the brink of disaster -- because the more the company sells, the more money it loses.

It happened to Xybernaut, which ended up declaring bankruptcy.