Cash Burn/Debt Load Assures Bankruptcy Ahead for Ford

Discussion in 'OT Driven' started by TriShield, Jul 13, 2009.

  1. TriShield

    TriShield Super Moderator® Super Moderator

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    Ford Cash Crunch Coming

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    By Robert Farago
    July 13, 2009

    I’ve taken a lot of heat in these parts for predicting that Ford’s bankruptcy bound. Having watched GM and Chrysler’s long march to Chapter 11, the signs seem pretty obvious to me: lousy branding, excess nameplates, non-competitive models, a pegged BS meter and a proven inability to take in more money than they spend. Yes, there are differences; his name is Alan Mulally. But, as The Detroit Free Press finally reports, The Blue Oval Boyz are burning down the house. Or, to put it more politely, “Even if Ford Motor Co. reaches all of its targets by 2011, the Dearborn automaker’s growing debt load could end up weighing the company down.” As far as euphemisms go, that one just went.

    Today, Ford has $25.8 billion in automotive debt — much of which was accumulated to raise cash so the company could survive the economic downturn that it correctly forecast several years ago . . .

    What’s more, Ford’s debt level could reach $36 billion by 2011, when Ford expects to be profitable again, Citibank analyst Itay Michaeli said in an interview with the Free Press. That is about four times more than Ford’s expected earnings. Healthy automotive companies usually carry about twice as much debt as earnings, he said.


    Ah revisionism. Ford decided to mortgage itself up to and including its logo without any foreknowledge of the economic downturn. They did it to survive their sinking fortunes in a “normal” (which is to say vastly inflated) U.S. new car market. In fact, the company’s analyst was publicly predicting a bull market even as the bubble popped. And then forecast recovery approximately ten minutes after the market tanked.

    Still is, actually. Pipas reckons the drought ends at the end of 2010, doncha know. FoMoCo better hope so.

    With that high level of debt to earnings, Ford’s debt could strain the company’s finances as payments on it become due. One of those payments is $10.1 billion, due in the fourth quarter of 2011 . . .

    “We gave guidance that our cash burn was $3.7 billion in the first quarter, which was substantially less than the fourth quarter, and we gave guidance that every quarter this year, it will get lower and lower and lower,” Mulally said. “That gives everybody confidence that we are on a positive track.”


    Ford might well be on a positive track—cutting costs, suckling-up to the federal teat ($5.9 billion loan from the DOE for retooling thank you very much) and ratcheting-up a, wait for it, .6 percent NA market share gain. But the U.S. new car market is dead in the water. With Nissan’s Carlos Ghosn (and TTAC) predicting an extended downturn, well, it’s only a matter of time before Ford runs out of dough.

    http://www.freep.com/article/20090712/BUSINESS01/907120508/1210/BUSINESS/Growing-debt-burdens-Ford
     
  2. TriShield

    TriShield Super Moderator® Super Moderator

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    Cliffs - Ford is fucked.
     
  3. Piracy

    Piracy New Member

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    cliffs - everyone is fucked
     
  4. SlowNegative

    SlowNegative Her name is Rio

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    Cliffs - American tax payers will continue to get fucked by UAW.
     
  5. Charles

    Charles Andalucia, mi tierra

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    There's a sub-forum of this.
     
  6. Y2kAccord

    Y2kAccord Everything happens for reasons I just dont know

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  7. JustinAngil

    JustinAngil Active Member

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  8. DuckMySick

    DuckMySick OT Supporter

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    So how much of Ford is the UAW going to get?

    UAW=Ballin' Outta Control
     
  9. Havsie

    Havsie When I die, bury me inside the Pepsi 1893 store OT Supporter

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  10. CJPA

    CJPA New Member

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    Ruh Roh.
     
  11. Coco Monkey

    Coco Monkey OT Supporter

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  12. slowbird

    slowbird I am the son, and the heir, of a shyness that is c OT Supporter

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  13. butta

    butta OT Supporter

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    its a sad day we live in...RIP Ford
     
  14. Vagabond

    Vagabond Nope. OT Supporter

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  15. Y2kAccord

    Y2kAccord Everything happens for reasons I just dont know

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  16. CJPA

    CJPA New Member

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    ZOMG A BANKRUPTCY

    THEY ARE GOING TO DISAPPEAR FROM AMERICA LIKE GM AND CHRYSLER HAVE!!!



    oh wait
     
  17. BLKDVLGSX

    BLKDVLGSX OT Supporter

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  18. fusion210

    fusion210 New Member

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    RIP America
     
  19. SilverTurtle

    SilverTurtle New Member

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    the problem with Ford is that they've pretty much pulled all of their cards... GM has the Volt and Cruze coming... and the Camaro is selling like hotcakes... something that GM hasn't had since the fall of 2002... so there are new products that GM can look at as positives... Ford has always had the Mustang and F-150 to stand on... and just about nothing else... so when some new competition comes into the market (like the Challenger and Camaro), their market share falls off

    I want Ford to make it... because without them, we're missing a part of American history and manufacturing that that we cannot get back if they go down... most people dont understand that... and that is a sad reality.
     
  20. kackel champion

    kackel champion faces always are changing lies and disguise for th

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  21. Read more...

    Read more... SPQR

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    Anyone actually read the article?
     
  22. ittech

    ittech "If You're Not Part of the Solution, There's Good OT Supporter

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    This was obvious a long time ago and I didn't understand all the media Ford cocksucking for not needing government bailouts at the time. Of course they didn't, they were already broke before GM/Chrysler and had to take out all those loans.


    At least it'll be just the lenders and shareholders that get fucked... Until Obama "saves" Ford with more taxpayer money because that would only be fair since they helped GM/Chrysler along.
     
  23. spooky

    spooky OT Supporter

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  24. Formz

    Formz Hipster Santa OT Supporter

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    Cliffs: I'm selling my shares of Ford right now.
     
  25. hsmith

    hsmith OT Supporter

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