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
I know the boycott is hurting Ford dealers in Texas. Beyond that, I am sure it is not working too well in San Francisco. Overall, I don't have the data. I know my inventory of cars no longer includes Fords. Ineffective? You probably know all the data on the effect of such things.
Ford drops the Mustang? When exactly did that happen?
As for the Taurus, there were arguably far too many people associating it with the mechanical faults of the AXOD-E and 3.8L, even though both had been gone for over a decade. Not only that, but it has always relied on HUGE fleet sales, which depresses resale values and new purchase prices (why buy new if you can get 1 year old for $6k less?)... The Fusion, whether or not you agree with renaming it, doesn't have the same problem as they have been avoiding fleet sales. Last figures I saw had a lower % fleet sales than for the Camry. One reason why its projected resale value is significantly better than the Taurus....
Hyundai and Kia are definite worries.
But Kia quality by all surveys still stinks in general. There may be some good new models, but I haven't seen any personally (haven't experienced the Optima). In general, though, their quality has seriously lagged Hyundai and pretty much every domestic brand.
I would consider a Hyundai myself, thanks to the 10 year powertrain warranty (five years better than everyone else, 7 better than Chrysler).... Unfortunately that Hyundai warranty is nontransferrable, so that doesn't help its resale values...
I've owned Fords since I started driving, 30 years ago.
I'm not a blind loaylist, I just thought they made better cars for the money.
I recently needed to replace my 95 Ford Escort. I went to the Ford dealership first. No more Escort. No more Taurus. They've been replaced by smaller models that are bland both inside and out. And they were comparatively pricey. I was very disappointed.
I bought a Honda instead.
Well, to start with, AFA boycotts have really never worked. This time they chose a weak target that actually was intentionally cutting sales in places (re: Taurus), and dependent upon truck sales, which weren't going to do well with rising gas prices. They could have chosen Toyota, who spends more than Ford on the ads in question, but they would have looked foolish boycotting a company with skyrocketing sales because of their deserved image as reliable and fuel-efficient.
However, think about it this way: There were about 659,000 who signed AFA's pledge. Assume that they were twice as likely to buy Ford as the average American, to make the effect look as bad as possible. That's 210,000 potential lost sales. However, that also is counting lost fleet sales, which are far less likely to be hit by the boycott. We'll count them anyway.
Of course, the average vehicle lasts about 14 years now, so that's 15,000 lost sales per year (not everyone boycotting would actually be buying a vehicle anyway).
That's really a worst case scenario, and not offset at all by any gains made in other demographic groups.
That's really a drop in the bucket.
And that ignores that retail sales for Ford have actually increased in many of the months the boycott has gone on. Ford is dumping unprofitable fleet sales fast, and that is where a huge portion of their loss in sales comes from.
Do you really think that if they thought it was making any significant impact on sales they would keep going (and most of all of what they have been accused of has stopped)?
I know that I have personally not bought a Ford because of their advocacy of the gay agenda, but I'm just one humble American out in fly-over country.
There are other problems with Fords that should make Americans pause before they buy one. One big problem is their sticker price. They're out of their minds.
I was truck shopping, and the same level CHEVY was in the neighborhood of 10 grand less....as was the Toyota and Nissan.
But, those who are out of touch with reality will buy into unnatural pricing and quality just as easily as they buy into unnatural lifestyles.
Once you decide that reality doesn't count, it affects everything you decide.
Who pays sticker? :)
BTW, I was recently helping a relative shop for a car... We got a BRAND NEW loss-leader Ford Focus for just under $10k. A similarly equipped Toyota Corolla was $14000, and the Civic was about $16500.
Anyway, I haven't bought another Ford since the boycott started. But that's just because the one I have keeps going and going and going.......
"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."
Ford has a "world car" chassis for Ford, Volvo and Mazda.
The latest version is used for the Ford Focus (Europe), Volvo S40 and Mazda 3.
The previous version is used for Ford Focus USA which is your vehicle.
I wonder how much better you would like it, if you had the latest version?
Assuming a similar markup and similar deduction from haggling, the sticker serves as the starting point.
Nonetheless, I did not buy the Ford, and I am still shopping. I will not buy the Ford because of the boycott.
Additionally, I'll continue to point out either their price problems or the gay problem or both....depending on what will make the person I'm conversing with less likely to buy their product.
One small way to support a boycott. Nothing like a whispering campaign.
My bad on the Mustang in the 80's. The wildly popular Mustang from earlier versions...I thought they had dropped the line as I don't remember seeing any (wasn't paying attention). I started noticing them again 90's and recently and thought that Ford was doing the right thing in design, marketing and advertising.
Thanks for your insightful analysis on their product line.
It seems like Ford, GM and Chrysler have brought so many products out over the years and dropped them. The Japanese automakers do not seem to introduce the continual variety of product lines only to abandon them a few years later.
Also it doesn't seem that long ago we had the big 3 competing for most of the market share of a nation of about 250 million people back then. The Japanese had 6 or 7 automakers competing in their nation of about 125 million people for their market. Competition in the Japanese market drove quality. (Competition always gives you the best possible product at the lowest possible cost) They took Deming's message to heart.
The last 15 years looking at quality in automotive parts, I've seen so many 5 and 6 sigma key characteristics of of Japanese parts while many domestic parts struggled to edge over 3 sigma on key characteristics. When you're constantly introducing new programs and managers are pressured to meet deadlines, surrogate data if often substituted for actual quality.
I have heard of their European car. The US Focus has 4 wheel independent suspension! The SE (my model) has ABS and other features. Telescopic/Tilt steering...
It handles very well, drives well, and as stated, cruises at 80mph with ease. And it rolls well. I have to break coming down hills because I will catch up with the drivers ahead with ease.
So far, I'm happy. Of course, the Ford $2,500 rebate helped make the decision.
I blame Matt Millen.
Well, you're right about the 2wheel drive chevies. They have an especially cheesy axle with a 5 bolt pattern... not within a lightyear of the Ford Dana 5 bolt axles. The 1'2 ton trcuks with the 6 bolt pattern hold up better.
Since I go offroad a lot I avoid any of the 1/2 ton trucks. In fact, I've never owned one. My Ford and Chevy 3/4 tons have all given good service. They are well worth the few extra bucks.
Funny how that is in today's market.
Can't stand those Japanese imports for love or money, wouldn't be caught dead in one. Would not recognize one if my truck pushed one in a ditch while the owner soccer mom on a cell phone crossed the solid yellow line.
But I totally, totally respect the business model that got them there in the first place.
Wifey's Ford SUV and my Ford truck have performed flawlessly since we bought them years ago, cannot imagine changing brands, especially with A, X or whatever plan to compound..
Got my truck with 0% finance and 0% down compliments of Ford Credit.
Jeez, if I could just get a mortgage lender to finance my house/cottage/business to a new buyer with the same terms Ford gave me I'd hit any border out of here faster than they're coming from the South.
;-)
Here's the thing, though - the Honda and Toyota dealers around here NEVER give ANYWHERE close to the same discount off sticker as Ford, GM, or Chrysler... its well-known the big 3 sell their vehicles for significantly more below sticker than the Japanese...
Feel free to do whatever you like - but it is only fair to note at the same time that Ford is not the biggest "culprit" here.... just the target du jour for AFA...
To be fair, the Mustang built off the old Fox platform almost doesn't count.... :)
Not to belabor the point, but GM was 10000 below Ford for a comparable vehicle. At this point, it's the Silverado for me instead of the F150.
As has been mentioned any number of times, the AFA boycott is based on a number of measures that TOGETHER equate to their being the worst. Then, they agreed to take a neutral position but then reneged on it.
Remember as well that the AFA is joined in this by a long list of dozens of other organizations, so it's clear to me that AFA's position is a supportable one.
It probably doesn't make much difference that a million+ folks are intentionally ignoring your vehicles and encouraging others to do the same. But, if I were a local grocery, I wouldn't want a 100 folks in the community doing the same....especially if a good number of those folks were pastors of churches, speaking weekly to hundreds.
I'm sure they don't help.
You have convinced me. I am still not buying a Ford. I am starting to like GM products better anyway.
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