xcel
01-27-2007, 06:06 PM
I fervently hope that Ford CEO Alan Mulally is right when he says the company is now at rock bottom and that the turnaround plan will work. (http://www.freep.com/apps/pbcs.dll/article?AID=/20070126/COL06/701260445&imw=Y)
http://www.cleanmpg.com/photos/data/501/Fords_-_Mulally.jpgTom Walsh - Detroit Free Press - Jan. 26, 2007
Ugly numbers get uglier
Sales volume, prices and the mix of cars and trucks Ford sold in 2006 all went the wrong way, and things got worse as the year went on: Automotive revenue was down 5% in the first nine months of the year, but plummeted more than 11% in the fourth quarter.
Red ink to keep gushing
Ford predicts its automotive operating loss -- $5.2 billion last year -- will be even bigger in 2007.
Losses in Asia and Africa
Ford lost $185 million in these markets, as rapid growth of car sales in China was overshadowed by problems in Australia and Taiwan.
Savior no more
Ford Motor Credit, the finance unit that offset crummy automotive performance in many prior periods, saw profits drop by $621 million to $1.3 billion after taxes last year. And Ford forecasts another decline for its finance operations this year.
Pricing under pressure
One of Ford's forecasting assumptions for 2007 is lower net pricing for cars and trucks. That will put heat on Ford to spend heavily on rebates and other incentives, if it wants to stop its market share swoon.
Cash going, going ...
Ford's automotive business was burning through cash at a rate of about $20 million a day during the last three months of 2006. The company expects negative cash flow for another three years, but at a slower rate. Better hope so.
Jaguar
No need to elaborate. A money pit if there ever was one.
GM's revival
"The worst of all possible problems for Ford is a rejuvenated, aggressive General Motors Corp.," says David Cole, president of the Center for Automotive Research in Ann Arbor. Ford has been losing sales for years to Asian competitors, but now GM is fielding its strongest product lineup in years, with the 2007 car and truck of the year -- the Saturn Aura and Chevrolet Silverado -- along with a new midsize Malibu and some promising electric and hybrid power train technology. GM just boosted its capital spending on future products by $1 billion a year to about $8.5 billion; Ford will have all it can do to maintain its current cap spending at $7 billion.
Chrysler's hiccup
Just as GM's resurgence is a threat to Ford, so is, in a different way, the sudden reversal of fortune at DaimlerChrysler AG's Chrysler Group, which neglected to turn off the production spigot on big trucks and SUVs last year when gas prices zoomed. An inventory glut resulted in a $1.5-billion third-quarter loss for Chrysler, which slapped rebates as high as $7,000 on some big vehicles to move them. Ford, of course, must compete with those Chrysler fire-sale tactics.
Don't believe everything you read
"We'll return to profitability in our North American automotive business no later than 2008," Ford Chief Financial Officer Don Leclair vowed in reporting Ford's 2005 financial results a year ago. He added: "We're confident in our plan and optimistic we can achieve our goals."
Oops. Eight months later, Ford pushed its return-to-profits projection back to 2009.
Along with presumably most other Detroiters, I fervently hope that Ford CEO Alan Mulally is right when he says the company is now at rock bottom and that the turnaround plan will work. The Wall Street wizards who trade in credit default swaps, a kind of insurance that quantifies the risk of a company going broke, have cut the odds of a near-term Ford failure in half since last June, so let's hope they're right, too.
But there's a big, dangerous mountain yet to climb for Mulally and Ford.
http://www.cleanmpg.com/photos/data/501/Fords_-_Mulally.jpgTom Walsh - Detroit Free Press - Jan. 26, 2007
Ugly numbers get uglier
Sales volume, prices and the mix of cars and trucks Ford sold in 2006 all went the wrong way, and things got worse as the year went on: Automotive revenue was down 5% in the first nine months of the year, but plummeted more than 11% in the fourth quarter.
Red ink to keep gushing
Ford predicts its automotive operating loss -- $5.2 billion last year -- will be even bigger in 2007.
Losses in Asia and Africa
Ford lost $185 million in these markets, as rapid growth of car sales in China was overshadowed by problems in Australia and Taiwan.
Savior no more
Ford Motor Credit, the finance unit that offset crummy automotive performance in many prior periods, saw profits drop by $621 million to $1.3 billion after taxes last year. And Ford forecasts another decline for its finance operations this year.
Pricing under pressure
One of Ford's forecasting assumptions for 2007 is lower net pricing for cars and trucks. That will put heat on Ford to spend heavily on rebates and other incentives, if it wants to stop its market share swoon.
Cash going, going ...
Ford's automotive business was burning through cash at a rate of about $20 million a day during the last three months of 2006. The company expects negative cash flow for another three years, but at a slower rate. Better hope so.
Jaguar
No need to elaborate. A money pit if there ever was one.
GM's revival
"The worst of all possible problems for Ford is a rejuvenated, aggressive General Motors Corp.," says David Cole, president of the Center for Automotive Research in Ann Arbor. Ford has been losing sales for years to Asian competitors, but now GM is fielding its strongest product lineup in years, with the 2007 car and truck of the year -- the Saturn Aura and Chevrolet Silverado -- along with a new midsize Malibu and some promising electric and hybrid power train technology. GM just boosted its capital spending on future products by $1 billion a year to about $8.5 billion; Ford will have all it can do to maintain its current cap spending at $7 billion.
Chrysler's hiccup
Just as GM's resurgence is a threat to Ford, so is, in a different way, the sudden reversal of fortune at DaimlerChrysler AG's Chrysler Group, which neglected to turn off the production spigot on big trucks and SUVs last year when gas prices zoomed. An inventory glut resulted in a $1.5-billion third-quarter loss for Chrysler, which slapped rebates as high as $7,000 on some big vehicles to move them. Ford, of course, must compete with those Chrysler fire-sale tactics.
Don't believe everything you read
"We'll return to profitability in our North American automotive business no later than 2008," Ford Chief Financial Officer Don Leclair vowed in reporting Ford's 2005 financial results a year ago. He added: "We're confident in our plan and optimistic we can achieve our goals."
Oops. Eight months later, Ford pushed its return-to-profits projection back to 2009.
Along with presumably most other Detroiters, I fervently hope that Ford CEO Alan Mulally is right when he says the company is now at rock bottom and that the turnaround plan will work. The Wall Street wizards who trade in credit default swaps, a kind of insurance that quantifies the risk of a company going broke, have cut the odds of a near-term Ford failure in half since last June, so let's hope they're right, too.
But there's a big, dangerous mountain yet to climb for Mulally and Ford.