Skip to comments.Ford May Report Worst Loss in History
Posted on 01/24/2007 5:37:16 PM PST by Flavius
DETROIT (AP) -- Ford Motor Co. could post the worst annual loss in its storied 103-year history when the automaker releases its 2006 earnings on Thursday.
The old record net loss was $7.39 billion in 1992, but through three quarters of this year, Ford already had lost $7 billion.
Fourteen analysts polled by Thomson Financial expect more red ink in the fourth quarter, predicting an average quarterly loss of $1.01 per share and $1.35 per share for the year, excluding special items.
"The fourth quarter's going to look real ugly," said Erich Merkle, director of forecasting for the auto consulting company IRN Inc. in Grand Rapids, Mich. He predicted Ford would get as much bad news out of the way as it can for the end of 2006, beating the 1992 record.
"Let's just air all our dirty laundry all at once. Take the medicine and then we can move on. I definitely think that's their philosophy, knowing it's going to be real poor," Merkle said.
Burnham Securities analyst David Healy said in a note to investors that Ford has yet to recover from its finances being wrecked by collapsing sales of its F-series pickup trucks and truck-based sport utility vehicles.
The company made a profit of $1.44 billion in 2005, and in the fourth quarter of that year, it produced and shipped 355,000 of the high-profit large and mid-sized truck models, Healy said. That dropped by 40 percent to 213,000 in the final quarter of last year, he said.
"In our view, most of the year-to-year increase in losses lies in the 142,000 year-to-year decline in these high-profit models," Healy said.
Production of other Ford models dropped by 53,000 in the fourth quarter of last year compared to the last quarter of 2005, driven by dealer stock reductions and the company's strategy to reduce traditional low-profit sales to rental car companies, Healy said.
Efraim Levy, senior industry analyst for Standard & Poor's, predicted Ford would post a $2 billion net loss for the last quarter of 2006.
Like other analysts, he sees bottom-line improvement in 2007 even though he predicts revenues will drop by 7 percent compared to 2006. He still sees a loss for this year, but said the improvement will come as Ford becomes more efficient and cuts costs by slicing its blue- and white-collar work forces.
About 38,000 hourly workers have signed up for buyout or early retirement offers from the company, and Ford plans to cut its white-collar work force by 14,000 with buyouts and early retirements.
The company has mortgaged its assets to borrow up to $23.4 billion to fund a massive restructuring plan and cover billions in losses expected until 2009. It expects to burn up $17 billion in cash during the next two years before returning to profitability.
Ford's revenue will continue to suffer in 2007 from intense competition, an expected lower overall auto market and weakness in Ford's financial services business, Levy said.
Ford has rolled out or will introduce several new or updated products during 2007, including the Edge crossover, new F-series Super Duty pickups, a redesigned Focus small car and an updated Five Hundred larger sedan.
But Levy said the company's new vehicles won't be strong enough for it to recover much this year.
"The new products aren't that exciting overall," he said.
Ford's sales last year were 8 percent below 2005 figures at about 2.9 million vehicles. Ford attributed the decline to a drop in truck and sport utility vehicle sales and the end of production for the Taurus sedan, which largely was sold to fleet buyers last year.
Ford is the first of the Detroit-area automakers to release its earnings for the year. General Motors Corp., which lost more than $3 billion in the first nine months of last year, will release its fourth-quarter and annual earnings on Tuesday.
DaimlerChrysler AG, which lost $1.5 billion in the third quarter, is to release its earnings on Feb. 14.
Ford Motor Co.: http://www.ford.com
GM is already on the road to recovery with some great products in the pipeline for this year: New Cadillac CTS, Buick Enclave, Chevy Malibu, Saturn Aura, Saturn Outlook, Pontiac Solstice, Saturn Sky, GMT-900s, etc... All of which are segment leading or are close to it. I really should have bought a bunch of their stock when it was in the crapper. I knew this would happen too!
Ford needs some work, but with Bill Jr. gone now and the Boeing CEO taking control they may have a future yet. My friend got a new Ford Fusion and it is a very nice car, especially for the $$$.
And internationally GM has done phenomenally btw. Even Ford outside of NA does pretty darn good. It is the darn Unions that will get them.
thats exactly what i said
i said people buy cars that don't break
if you ask an average person which car they know if that does not break up
it will be toyota
thats why they are #1
Even Edsel didn't screw it up this bad!
My 2002 Ford Mustang is awesome. I've been very happy with Fords.
Ford will eventually be reduced to a truck division and nothing more. Perhaps the Ford family will take it private or perhaps merge with another auto company. Being that GM, Chrysler/Diemler, and Toyota already have their own strong truck divisions, these would be ruled out. Perhaps Renault or Nissan?
I heard a comment on CNBC the other day; a talking head stated that the Big Three are very inefficient and thereby does everything very slowly, they can't even go bankrupt in a hurry....
Wow. I hope they can make it.
AFA has a nice boycott going on Ford. But, liberals at Ford are too dumb to see they are going over the gay cliff.
"Until ford can bulid a full size pick up worth a dam i will keep buying toyotas every ten years and worry only about gas tires and oil"
You can't be serious. Ford has the best selling pickup truck in America for 30 years. Why they can't be profitable with their truck line and the legendary Mustang is beyond me.
LOL - I tracked the picture back via the properties.
It is only a matter of time before Toyota, Honda, and Nissan design and market a pickup that farmers, hunters, and contractors in Indiana, Iowa, and Georgia will buy. When they start replacing their F-150's, Silveradoes, and Rams with imports, the Big Three will have nothing left to stand on. Pickup sales are all they really have left.
I cannot believe they're selling that ugly little anonymous car as being"sexy" or "edgy."
cross over is that like almost a guy
The only thing new about "crossovers" is the term itself. These are purely minivans and station wagons they are selling.
I worked for Ford- Engine Plant #1 in Cleveland- for a year, before I volunteered for the draft in 1969. Ran a piston rod grinder and had to grind 9,000 rods a night. When I'd run 5,000, each night, the foreman would come over and adjust the counter to 9,000 and send me up to the cafeteria to play gin for 3 hours. The other 4,000 were known as "paper rods". Being a dumb kid, one day I asked the foreman why we were making "paper rods". He looked at me with hillbilly incredulousness and said, "because they're making piston heads over on the head line"!
The military came as a breath of fresh air.
well every car mechanic/salesperson i talk to toyota or mercedes for example
talk of endless parade of sensitive people whining about the road noise and tire noise on their trucks
and all the girls wanted a truck with a car like performance
so what are the poor manufactures to do but to build these minivans with 4 wheel drive capability
at end they have to sell what people want and like much else its a softy cars/truck lookalikes they are after
Look for the Union Label.
I just bought a 2007 Ford Focus 4dr Hatchback. Great handling, cruises at 80 and with less than 3,000 miles, I am getting 30+mpg. Yes, the inside is plastic, but what did I pay for? An economical, good riding car. And guess what I got? An economical and good riding car.