Ford: where big losses are the new job 1
Growing up I was a GM guy, Ford was definitely a four-letter word.
I loved the name jokes, too: "Fix Or Repair Daily"
and, of course, "Found On Road Dead".
While they've come a long way, apparently they have a long way to go, too.
Ford posts worst loss in its history
By TOM KRISHER, AP Business Writer
Ford Motor Co. lost $5.8 billion in the fourth quarter amid slumping sales and huge restructuring costs, pushing the automaker's deficit for the year to $12.7 billion, the largest in its 103-year history.
The annual loss reported Thursday surpassed its previous record for a year of $7.39 billion set in 1992. The 2006 loss amounted to of $6.79 per share versus a profit of $1.44 billion, or 77 cents a share, in 2005.
It was far from the largest quarterly or annual corporate loss on record _ the company now known as Time Warner Inc. reported a $97.2 billion loss in 2002, largely due to new accounting rules about how to value assets. Ford could not rely on accounting rules, however, for its staggering total, which represented a loss of $4,380 on each car or truck they sold in 2006.
Ford's loss also didn't surpass the worst such annual total in the auto industry. General Motors Corp. lost more than $20 billion in 1992.
Dearborn-based Ford expects more losses for this year. It expects to burn up $10 billion in cash on automotive operations through 2009 and spend another $7 billion to invest in new products.
The fourth-quarter loss was the worst final-quarter loss in Ford's history and its second-worst quarterly performance. Ford lost $6.7 billion in the first quarter of 1992, due mainly to accounting rule changes on health care liabilities.
"We began aggressive actions in 2006 to restructure our automotive business so we can operate profitably at lower volumes with a product mix that better reflects consumer demand for smaller, more fuel-efficient vehicles," Alan Mulally, president and chief executive officer, said in a statement. "We fully recognize our business reality and are dealing with it. We have a plan and are on track to deliver."
Excluding special items, Ford lost $1.50 per share in all of 2006, worse than Wall Street predicted. Fourteen analysts polled by Thomson Financial expected a loss of $1.35 per share for the year, excluding special items.
Its shares fell 15 cents to $8.05 in morning trading on the New York Stock Exchange. They have traded in a 52-week range of $6.06 to $9.48.
Ford, faced with increasing competition from overseas rivals such as Toyota Motor Corp., is banking on a restructuring plan to pull it through this rough stretch. Mulally, hired from aerospace giant Boeing Co., is leading the drastic efforts to turn around the company.
Ford mortgaged its assets to borrow up to $23.4 billion to pay for the restructuring and to cover losses expected until 2009. 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.
Ford, which relied on truck and sport utility vehicle sales for much of its profits, was hurt last year as $3 per gallon gasoline sent consumers fleeing to smaller, more fuel-efficient vehicles. Ford has seen its market share deteriorate in recent years. At the same time, Toyota has seen its U.S. sales rise, beating Ford out for the No. 2 sales spot in July and November.
The company 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 many analysts are skeptical that the products are strong enough to turn the company around.
Mulally said earlier this month that Ford's restructuring plan remained "absolutely the right thing to do."
Ford said that special items associated with restructuring costs totaled $9.9 billion for the year as the company continues efforts to shrink itself to match reduced demand for its cars and trucks.
Sales for the fourth-quarter fell to $40.3 billion from $46.3 billion a year ago, while annual sales dropped to $160.1 billion from $176.9 billion in 2005.
Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy; its inherent virtue is the equal sharing of misery. (Winston Churchill)