US:Reeling Ford: No alliance
Reeling Ford: No alliance
We'll fix $5.8-billion loss alone, Mulally says
BY SARAH A. WEBSTER
DETROIT FREE PRESS BUSINESS WRITER
Ford Motor Co. posted its largest quarterly loss in 14 years Monday -- bringing total losses for the year to $7.2 billion -- but new Chief Executive Alan Mulally said the automaker doesn't need any partners or alliances to turn itself around.
"We have no plans and do not see the benefit of any alliances at this point," Mulally told the Free Press in a telephone interview Monday, after the company's preliminary financial results showed a $5.8-billion loss in the third quarter. "I know that with everything that I know, that I feel, that the focus of Ford has got to be on this transformation."
Some investors have been hopeful that Renault SA and Nissan Motor Co., which are seeking a North American partner, might begin talks with Ford after their talks with General Motors Corp. fell through. Ford Chairman Bill Ford said during the summer that he was open to considering the option.
But Mulally said Ford must forge ahead alone for now -- and it looks like the road will be rough.
Ford's losses widened from $1.4 billion in the first half of the year. The $5.8-billion figure, or $3.08 per share, was more than 20 times worse than the net loss of $284 million, or 15 cents per share, posted during the third quarter a year ago.
The reasons: hefty restructuring costs, which caused $4.6 billion in losses, and falling demand for profitable trucks.
Improved sales of cars, such as the Fusion, are not coming close to offsetting the decline in truck revenues. In all, sales fell $36.7 billion, a 10% decline from the same period a year ago.
Without restructuring expenses and other one-time charges, the loss from continuing operations was $1.2 billion, or 62 cents a share. John Casesa, an auto analyst based in New York, said that figure was "in line with very low expectations" from investors.
What's more, Don Leclair, Ford's chief financial officer, warned that fourth-quarter automotive operating results would be even worse than the $1.8-billion auto pretax loss posted in the third quarter.
Those results may not even be the final numbers.
The automaker said it would restate its earnings from 2001 until now to fix an accounting error that has snagged many companies in recent years. The net impact of the change was unclear, but the company said the expected restatement would improve results for 2002.
Several top analysts and credit agencies that reviewed the problem said they believed it was technical in nature.
Although Ford's poor results were largely expected, some analysts criticized the performance as overly poor in some areas but said it was surprisingly good in others.
Ford lost $2 billion in its North American division, in line with most expectations.
But the Premier Automotive Group, which manages Ford's luxury brands such as Jaguar, Volvo and Land Rover, posted a pretax loss of $593 million. Last year during the same period, it posted a pretax loss of $108 million. While much of that decline was due to accounting changes related to warranty expenses, experts weren't forgiving.
Merrill Lynch analyst John Murphy said the Premier showing was "the worst on record and highlights the urgent need" to deal with the problems there.
Mulally called Ford's performance "clearly unacceptable."
For now, the former Boeing exec, who started Oct. 1, is sticking with the Way Forward. The plan calls for trimming 14,000 salaried and 30,000 hourly jobs and closing 16 plants by 2012.
Watching Ford's cash supply
Analysts are keenly watching Ford's cash supply.
Ford has been trying to shore up its $23.6-billion cash reserves to calm people concerned that it lacks the resources to restructure.
The company estimates it will have $20 billion in cash by year's end, plus $6 billion in credit and $3 billion in a trust to cover future retiree benefits.
Ford has put up for sale its Aston Martin ultra-luxury brand. On Monday, it said it was working to get financing by using assets as collateral.
"We are projecting to have negative cash flows," Leclair said. "We do want to make sure we have plenty of liquidity, not only to cover operating losses and our restructuring but to make sure we have a cushion in case there are some bumps in the road in the economy."
Auto analysts expressed serious concerns about Ford's liquidity. J. Bruce Clark, a senior vice president at Moody's, said its restructuring doesn't really begin to deliver positive results until 2009 and it needs several billion dollars a day to run its worldwide operations.
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.....