Join Date: Feb 2001
Location: The Hills of North Georgia,USA
Re: US:Analysts warm to Ford strategy
Ford signals more transparency on turnaround
DETROIT -- Ford Motor Co. will provide more financial transparency on its turnaround plan, particularly how its goal to save $5 billion in North American costs could get the automaker back to break even, analysts said.
Ford's new CEO Alan Mulally and CFO Don Leclair told a small group of analysts about the plan for greater disclosure when they met with them over lunch in New York on Tuesday, Oct. 24.
"Management did say that in its next Webcast event, it will more specifically outline how $5 billion of savings can get Ford back to break even," said Bear Stearns analyst Peter Nesvold, who attended the meeting, in a research note. "The key takeaway was that the current $5 billion cost target is really just a starting point."
Ford spokeswoman Becky Sanch said the meeting was set up because Mulally wanted to meet with members of the investment community.
Mulally also acknowledged to analysts that the turnaround will take a long time and there will no dramatic improvement in profitability any time soon.
Ford on Monday, Oct. 23, posted a $5.8 billion loss, its largest in 14 years, as it absorbed charges for restructuring, operating losses and asset write-downs.
Ford, which stopped providing financial guidance in January, has been criticized for not giving more details on its plan to return to profitability by the end of 2009 in North America.
"(Mulally) and CFO Leclair also seem to have embraced a philosophy of greater financial transparency if not earnings guidance, which we applaud," JP Morgan analyst Himanshu Patel said in a note today, after attending the meeting.
Ford also cautioned on Monday that operating results would weaken in the current quarter and cash flow would remain negative in the coming few years.
But Wall Street appears to be gaining confidence that Mulally, a former Boeing Co. executive credited with turning around the aircraft maker's commercial plane division, will be able to steer Ford back to profits.
"Our overall impression of Mulally was quite positive," Deutsche Bank analyst Rod Lache said in a note. "We see him as credible and inspiring leader who should be able to make an impact in what has historically been a slow-moving, and obdurate bureaucracy."
Mulally also told analysts that he wants to simplify and streamline Ford's product offerings and production systems.
He said Ford has "too many models, too many platforms, too many different components," Credit Suisse analyst Chris Ceraso wrote in a note to investors. "Streamlining that complexity represents a huge opportunity for Ford to improve returns and create shareholder value."
Ford plans to close 16 plants, slash nearly 45,000 jobs and is offering buyouts to about 75,000 of its union workers as part of its restructuring.
My first car was a 67 Mustang Coupe, 2nd one was a 67 Cougar XR-7, 3rd one was a 66 Mustang Coupe. Why did I get rid of these cars for ? I know why, because I'm stupid, stupid, stupid.
My next Ford.....