Ford Posts Loss of $5.8 Billion, Worst Since '92

"I know that the people of Ford have been through some tough times in the past few years," he wrote. "I wasn't here to share that with you, but I am here now to help move us forward," adding that it is "at once the most humbling and exciting prospect of my professional life."

This year, Toyota, which had lagged behind the three Detroit companies in American sales, has passed DaimlerChrysler, which includes its Mercedes and Chrysler Group divisions, to rank by sales as the No. 3 auto company in the United States.

Given the slide at Ford, Toyota is likely to pass it, too, in the next few years. Ford executives have already acknowledged that their company is likely to hold only 14 percent to 15 percent of the American market once its transformation is complete, or about 10 percentage points less than at the beginning of the decade.

In fact, Ford's market share declined to 15.5 percent in the third quarter, a drop of two percentage points from the corresponding period in 2005, and a central reason for its significant loss, which included more than $3 billion in special charges related to the Way Forward plan.

That in itself did not shake Wall Street, but investors were surprised when Ford's chief financial officer, Donat R. Leclair, said in a conference call with analysts that the company expected fourth-quarter performance to be worse than that in the third quarter.

In trading Monday, Ford shares fell 11 cents, to $7.90.

Yet these heavy losses. and the prospect of more, come as the company is seeking to enter the market with a new group of small, more fuel-efficient vehicles.

These include a new crossover vehicle, the Edge, which Ford introduced last week, and it is promising to eventually introduce a subcompact to compete with models sold by G.M., Toyota, Honda and Nissan. Unfortunately for Ford, the smaller vehicles come with an expectation of smaller profits.

In revising its Way Forward plan last month, Ford said it did not expect to earn money in North America until 2009, a year later than it originally predicted. Mr. Leclair said in an interview Monday that Ford anticipated a profit of 3 percent to 5 percent once it emerged from the red.

But getting there will be difficult. Mr. Mulally said Mr. Ford had been "really clear" during its courtship of him that grim days lay ahead. But he said he was not deterred.

"The Ford company is looking at business reality and dealing with it," Mr. Mulally said.

Ford's third-quarter loss, equivalent to $3.08 a share, is more than 20 times that a year earlier, when it lost $284 million, or 15 cents a share.

"Let me make it clear - these results are unacceptable," Mr. Mulally said in the conference call, his first, with analysts and journalists.

Ford also disclosed that it would restate its financial results because of incorrect accounting of derivatives linked to interest rate by its finance arm, Ford Motor Credit.

The company said it was still studying most of the period affected, from 2001 through the third quarter of 2006, but that earnings from 2002 "will improve materially."

Through the first nine months of the year, Ford has lost $7.24 billion, with more than 80 percent of that coming from June to September. By contrast, it earned $1.8 billion in the comparable nine months of 2005.

In the third quarter, Ford's automotive operations lost $1.2 billion, or 62 cents a share, roughly what analysts had expected.

To reduce its work force, Ford is offering buyouts and other incentives valued as high as $140,000 each to all 75,000 hourly workers in the United States. Those workers have until Nov. 27 to decide whether to take one of eight severance packages, while white-collar workers who are offered buyouts are expected to leave by spring.

Shelly Lombard, a senior high-yield bond analyst with the research firm Gimme Credit in New York, said, "We don't expect to see any improvement until the second half of next year, when most of the employees who take the buyout will have exited."

Mr. Casesa said Monday that Mr. Mulally's presence was a rare bright spot for Ford.

"You've got a new C.E.O. with a fresh pair of eyes on Ford's problems," he said. "Increasingly, the market will look to this new C.E.O. for some creative ideas to reinvigorate the revenue line."

For his part, Mr. Mulally said he took the job "because I think we can do this."

"This is an important industry" and Ford has so much opportunity for improvement, he added.

Asked whether he felt pressure from the expectations being placed on his performance, Mr. Mulally replied, "There's no reason why we can't do this, so it's no pressure."

Yet another $.02 worth from a proud owner of a 2001 Ranger and a 1970 Mustang Mach 1 @

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Grover C. McCoury III
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financial results in more than 14 years Monday and warned that its business was likely to worsen further in the months ahead, as it and other Detroit auto companies struggle to reinvent themselves.

executive, said the automaker would require a full transformation in the way it thought about consumers and approached the American market.

hit vehicles but with little change in attitude, will not be enough to see Ford through, Mr. Mulally said in an interview at Ford's headquarters here on Monday.

acknowledge the grim realities of the marketplace and then realign itself to be more productive and nimble.

a view that's different than the way it's being done today. Because if they don't, we are surely not going to get there."

Group, which is expected to join Ford on Wednesday in reporting dismal results for the last three months.

stretches in its history with savings from deep cost cuts, is expected by Wall Street to earn a profit in the third quarter, of about $300 million, though its American operations may well remain in the red.

companies' too-long reliance on gasoline-consuming sport utility vehicles, as well as their failure to develop new cars and trucks to fend off their Asian competitors, particularly Toyota and Honda of Japan and Hyundai of South Korea.

last two decades and focused on fuel-efficient vehicles, even as they added S.U.V.'s and pickup trucks to compete in Detroit's last stronghold. That two-part approach paid off in record sales for the Asian makers this summer, when gasoline prices soared above $3 a gallon on average nationwide.

hard on Ford and Chrysler, which have been slow to wean themselves away from big vehicles and the outsize profits that such vehicles typically produce.

the company could be on track to lose more than the $10.6 billion that G.M. did last year, even though G.M. is one-third bigger. Ford's recent losses were deeper than it, and many on Wall Street, had expected.

months of the year would be even worse than its results in the quarter recently ended. And it indicated that it expected its problems to continue through at least the first half of 2007.

at least $1.5 billion for the last three months when it reports on Wednesday. That is twice as much as Chrysler previously cautioned analysts to expect.

nearly 100,000 more unsold vehicles on hand this summer than it previously disclosed, at a time when its backlog soared well above industry norms. [Page C6].

appear healthier. It began a plan nearly a year ago to cut 30,000 jobs and close all or parts of a dozen plants by 2008.

Ford, said John Casesa, a longtime auto industry analyst.

can do two things: borrow more money and sell assets" to buy time until their operations problems are fixed.

and is believed to be seeking buyers for its other British marques, Land Rover and Jaguar. It has begun a restructuring plan, called the Way Forward, which includes more than 40,000 job cuts and a dozen or more plant closings through

2008.

industry for a new chief executive, Mr. Mulally, who succeeded William Clay Ford Jr. in the post last month. Mr. Ford continues as chairman.

would continue.

eventually profitable, following similar steps he took at Boeing. During his time there, Mr. Mulally streamlined production and helped the company remain profitable even when airlines reduced orders after the September 2001 attacks.

threat to long-cherished benefits like health care, that the company has a vibrant future. Ford, once among the most respected names in corporate America, has been rattled in recent years by a series of high- and midlevel departures, producing a brain drain.

said. "It will require a transformation of the product line and a transformation of the business. You can't do one without the other."

said, may last longer than that of the typical auto company executive, given his newcomer status. After just two weeks on the job, he sent Ford employees an e-mail message telling them that he had three priorities: people, products and productivity.

few years," he wrote. "I wasn't here to share that with you, but I am here now to help move us forward," adding that it is "at once the most humbling and exciting prospect of my professional life."

American sales, has passed DaimlerChrysler, which includes its Mercedes and Chrysler Group divisions, to rank by sales as the No. 3 auto company in the United States.

years. Ford executives have already acknowledged that their company is likely to hold only 14 percent to 15 percent of the American market once its transformation is complete, or about 10 percentage points less than at the beginning of the decade.

drop of two percentage points from the corresponding period in 2005, and a central reason for its significant loss, which included more than $3 billion in special charges related to the Way Forward plan.

Ford's chief financial officer, Donat R. Leclair, said in a conference call with analysts that the company expected fourth-quarter performance to be worse than that in the third quarter.

seeking to enter the market with a new group of small, more fuel-efficient vehicles.

week, and it is promising to eventually introduce a subcompact to compete with models sold by G.M., Toyota, Honda and Nissan. Unfortunately for Ford, the smaller vehicles come with an expectation of smaller profits.

earn money in North America until 2009, a year later than it originally predicted. Mr. Leclair said in an interview Monday that Ford anticipated a profit of 3 percent to 5 percent once it emerged from the red.

"really clear" during its courtship of him that grim days lay ahead. But he said he was not deterred.

that a year earlier, when it lost $284 million, or 15 cents a share.

the conference call, his first, with analysts and journalists.

incorrect accounting of derivatives linked to interest rate by its finance arm, Ford Motor Credit.

through the third quarter of 2006, but that earnings from 2002 "will improve materially."

more than 80 percent of that coming from June to September. By contrast, it earned $1.8 billion in the comparable nine months of 2005.

cents a share, roughly what analysts had expected.

as high as $140,000 each to all 75,000 hourly workers in the United States. Those workers have until Nov. 27 to decide whether to take one of eight severance packages, while white-collar workers who are offered buyouts are expected to leave by spring.

Credit in New York, said, "We don't expect to see any improvement until the second half of next year, when most of the employees who take the buyout will have exited."

said. "Increasingly, the market will look to this new C.E.O. for some creative ideas to reinvigorate the revenue line."

improvement, he added.

performance, Mr. Mulally replied, "There's no reason why we can't do this, so it's no pressure."

Mach 1 @

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corporate losses are merely written off at tax time- the fed, state, local governments end up giving the corp. about a 50% or more tax break

due to the loss- and "billions" to Ford is like a nickel in our pockets- it's nothing

Ford owns several overseas car companies- and they aren't all doing bad- some major names like LAND ROVER- MAZDA- JAGUAR-VOLVO- ASTON MARTIN- etc.

take a look for yourself- they are still the #3 carmaker in the world

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laying people off just means they will make more money next year- less paychecks to send out

they've had loss years before- no biggie

here is their world holdings

  1. Ford Motor Company (United States) - 6,418,416 vehicles Aston Martin United Kingdom Subsidiary Luxury / Performance Global Ford Motor Company United States Division Mainstream Global Jaguar United Kingdom Subsidiary Luxury Europe/North America Land Rover United Kingdom Subsidiary Luxury Truck Global Lincoln United States Division Luxury North America Mercury United States Division Near-Luxury North America Volvo Cars Sweden Subsidiary Near-Luxury Mazda

doesn't mean they are going out of business any time soon

Reply to
duty-honor-country

"This is an important industry" and Ford has so much opportunity for

improvement, he added.

First "improvement" Mulally has to accomplish is to clean up Billy Boy Ford's doo doo messes. We will never see another Ford family scion at the top of this company. After the disasters of King Henry II and the latest dingbat, the Ford Family Duchy is finally gone.

Asked whether he felt pressure from the expectations being placed on his

performance, Mr. Mulally replied, "There's no reason why we can't do this, so it's no pressure."

Ask him again in six months.

Reply to
DeserTBoB

Gotta love Corporate Welfare.

interesting concept.

I don't think anyone expects them too. Chrysler has been 'going out of business' since the late 1960s, iirc.

-phaeton

Reply to
phaeton

improvement, he added.

performance, Mr. Mulally replied, "There's no reason why we can't do this, so it's no pressure."

Don't bet anything but wooden nickels on that line of thinking. My opinion, and that's all it is, is my opinion, is that the Ford family wants to take the company private, drive the stock down and its cheaper to do. The worst thing for a company is board of directors and a ton of share holders more interested in short term stock dividends and ratings, than long term health of the company and the product. And public traded companies end up just that way. Whitelightning

Reply to
Whitelightning

Really? That means they still lose 50% or so. Pretty big.

Really? Ford had total assests of about $50 billion on Dec. 31. So that is like losing 10% of your total assets. Imagine if you had $50,000 and lost $5000. It is far from nothing.

And they are trying to sell some. Mazda is not wholly owned by Ford. And there is no etc. THat is all the car companies they own.

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Well, maybe they will start making money 3 or 4 years out.

And if they don't make big changes now, they will have more loss years.

But they are doing poorly. If they don't change, they won't be in business.

Jeff

Reply to
Jeff

I think Ford (and GM and Chysler) is in a lot worse shape than they admit. They only chance any of them have to survive is to get labor cost way down and improve quality. It will never happen in current structuring. They are kidding themselve (managemtn and Labor) if they think they can pull it off otherwise. Prices have reached critical mass and can no longer sell to support current costs and benifits. If they all could cut labor costs 30% or more they could sell vehicle 15% cheaper across the board and make a profit and boost sales but they seem to keep hoping that people will except pay more for their car than some did for a house 20 years ago. The worst is yet to come for them.

----------------- TheSnoMan.com

Reply to
SnoMan

You friggin idiot! How about you take a 30% pay cut and donate it to the big

  1. Your pretty free with everybody else's money, put your's where your big mouth is!

they could sell vehicle 15%

Reply to
Roy

On Tue, 24 Oct 2006 23:46:30 -0400, "Roy" wrote:

Oh the real idiot speaks! You really are clueless but as usual shoot you mouth off about thing you hane no real understanding of. Currently

70% of the cost of building a new car is LABOR!!!!! The market will not longer support it plan and simple. The big three will go under if this is not changed as the writing in on the wall. The airlines have been going through this for years and do not make what they once did. You are free to beilve othersie but wishing do not make it happen. It is going to basicall come down to in the next 3 to 5 years tops that there will either be big waage concessions or they will be out of a Job because the Big 3 will go bankrupt. The pot is not limitless and it is getting empty fast and higher fuel prices will be here soon two with $4 a gallon fuel not far away one day and Detriot is still stuck on gas hogs that they have to beg people to buy. I bet you beleive that we can grow our way out of this in the field with ethanol too. The only problem with tis is if all of the corn was used (leaving none for food at all) it would only replace about 25 to 30% of the gas used daily tops but since we have to eat too it will not make that big of impact. Detriot has their head in the sand and just keeps build the gas hogs that will soon have gas payments bigger than car payments. They only way they can survive long term is to get costs down and lower price of product to offset higher fuel costs or go out of bussiness. Sure you can blame Toyota and Honda but Detriot gave the market to them with their limited vision and there fixation with high profit SUVs since mid 90's that paid labors bills but are not longer bringing in profit because they are not selling without big discounts and incentives but you would know this too if you knew math and ecomonics.

----------------- TheSnoMan.com

Reply to
SnoMan

Good grief, are you really that ignorant? Corporate taxes are paid on, you know, um, profit. So yes, if you show a loss, you get a substantial tax break. But that's because *you're* *losing* *money*.

googlegooglegoogle looks like Ford is currently reporting a net worth of $14B. So a loss of $5B is like a nickle if you live in a cardboard box under a bridge.

I'm not going to look all these up, but Jaguar kind of stands out. Ford paid $2.5B for them in 1989, and assumed $1B in Jaguar debt. Since then they've lost $10B on the it.

Reply to
Joe Pfeiffer

What made you decide to move your signature to the top of your posts?

Reply to
aarcuda69062

How do you know what I know about or what my background is, or what I have a understanding of?

I'm waiting for you to take a 30% cut in pay! Well?

Now it is 70%? Make up your mind.

Oh while I have your attention. Nice one on the chevy group about the brakes. You are such a idiot.

Reply to
Roy

Indeed, the new chief executive at Ford, Alan R. Mulally, a former Boeing

> executive, said the automaker would require a full transformation in the way > it thought about consumers and approached the American market.

Well at least he recognizes Ford has a consumer related problem. That's a good start.

Reply to
Some O

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you're mistaken there, and I disagree- here's why

they posted a $5.8 billion loss- that means they can WRITE IT OFF

in that so-called "loss", is a lot of accounting tricks, i.e. DEPRECIATION.

what you really need to see, is their STATEMENT OF CASH FLOW

it's possible to show a loss on the P&L statement, and actually have a POSITIVE cash flow

i.e. an ACCOUNTING LOSS, that can be written off over time

now, being they showed this alleged "loss" of $5.8 bill, that is 5.8 bill in PROFITS they don't have to pay TAXES on

corporations pay taxes at an extraordinary percentage- like 40% or more.

so basically, if they made a 5.8 bill PROFIT they'd owe Uncle Sam 40% of it anyway, or around 2.3 billion

the government basically "picks up" a piece of that "loss", with reduced tax revenue

in the meantime, Ford lays off thousands of people, which is less cash they send out

the cash flow IMPROVES even more

so it's not really a loss- it's an accounting trick

do you REALLY THINK that Jaguar, Volvo, Mazda- all owned by Ford- lost money ??

your sarcasm shows you d

Reply to
duty-honor-country

your wrong there- how "bad off" can they be, when GM is #1 in sales units, and Ford is #3 ??

Toyota is number 2, gee, they must be worse off than GM then, aren't they...

stop listening to CNN and the gloom and doom liberal press- the American Big Three are alive and well.

If Ford "lost" 5.8 billion, and had 50 billion in assets, well 2nd grade math says, they still have 44.2 billion in assets. And that "loss" can be disputed, as it's an accounting loss, taking in wasting assets, depreciation, bad debts, etc. Lots of stuff they can write off and save on taxes with.

that's a lotta dough, pal !

Reply to
duty-honor-country

Good post- you hit the nail.

GM makes the best domestic cars, always have, always will.

Ford makes some "interesting" products, just like Chrysler did- but overall, GM has the better engineers, better engines, better cars.

That's why GM has been the biggest car co. in the world- FOR DECADES.

It's pretty hard to sell new cars to people, when the old ones you sold

10-15 years ago were built so well, they are still running fine like clocks. Where's the incentive to go in debt $25grand and buy another one ?

you can only drive a car so much !

Reply to
duty-honor-country

Given your comments, it is easy to figure out.

----------------- TheSnoMan.com

Reply to
SnoMan

Chrysler is out of buisness. Just because they renamed Diamler-Benz, DiamlerChrysler, don't fool yourself into thinking that "Chrysler" as we knew it exists any more. Chrysler is no more a going concern than Nash, Hundson, American Motors, Dodge, Sunbeam, Simca, or Maxwell.

Ed

Reply to
C. E. White

Well, well, That has to be the first time you have answered a question! Now, how about explaining the brake info you posted?

Reply to
Roy

Um no. And if that's the way you feel, why are you in Ford NG's?

Biggest doesn't mean best. GM makes a lot of crap and has done so FOR DECADES. It's size means that they have gotten away with it FOR DECADES.

True... Which is why it takes an interesting car at a good price to get me considering buying a new car. Another issue is the dealerships. No matter how good the new product is, just going in there is an unpleasant experience.

Reply to
Brent P

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