First GM, Now Ford in Trouble

Discussion in 'OT Driven' started by TriShield, Apr 10, 2005.

  1. TriShield

    TriShield Super Moderator® Super Moderator

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    Ford slashes 2005 earnings outlook - Automaker blames expected drop in earnings on health care and materials expenses.

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    April 8, 2005: 6:42 PM EDT

    DETROIT, April 8 (Reuters) - Ford Motor Co. slashed its 2005 earnings forecast Friday and warned it no longer expects to reach its 2006 profit goal, citing higher costs, becoming the second big U.S. automaker in less than a month to paint a bleak picture about its future.

    The No. 2 U.S. automaker said it expects its 2005 profit to be at least 14 percent lower than anticipated and does not expect to hit its 2006 profit goal of $7 billion before taxes, due in part to higher raw material and health care costs.

    Ford shares fell almost 5 percent to $10.49 in after hours trading.

    The profit warning, which was announced after the market closed, caused Standard & Poor's to cut its debt rating outlook on Ford and its finance arm to "negative," bringing the automaker a step closer to a downgrade to junk status. A downgrade to junk could raise borrowing costs significantly.

    Ford faces many of the same problems as rival General Motors Corp., which warned last month that it will post its weakest first-quarter earnings since 1992, and profits this year could miss forecasts by as much as 80 percent.

    "The industry dynamics that Ford and GM face are similar: high material costs, high legacy costs, declining market share, lackluster product cycle success," said John Kollar, auto credit analyst for HSBC Securities.

    Ford's 2005 revised outlook comes as it continues to lose market share to domestic and Asian rivals. The company's U.S. sales have declined 5.2 percent so far this year.

    "Although one of our strongest ever product line-ups has been well received by consumers around the world, we are not immune to the broad economic challenges we all face in our industry," Ford Chairman and Chief Executive Bill Ford Jr. said in a statement.

    "Obviously there are actions we could take to achieve our pretax profit goal of $7 billion for 2006, but we will not mortgage Ford's future by chasing an objective set under vastly different market and economic conditions," he added.

    High costs

    The $7 billion target was viewed as a crucial milestone in the 5-year turnaround plan Ford launched in January 2002, when the industrial icon was teetering on the brink of collapse.

    "Historically high prices for steel and crude oil, escalating health care expenses and a weak U.S. dollar presented formidable challenges as we entered 2005," Chief Financial Officer Don Leclair said in a statement.

    Ford said those pressures have intensified, while aggressive price competition continues in the U.S. auto market.

    The automaker cut its 2005 earnings forecast to a range of $1.25 to $1.50 per share from its previous estimate of $1.75 to $1.95 per share.

    Ford cautioned last month that its 2005 earnings would likely be at the lower end of its forecast range.

    The revised forecast excludes the effect of special charges, which are estimated to be in the range of 8 to 10 cents per share for the full year. Analysts on average expect Ford to post earnings of $1.68 per share in 2005.

    But despite rising costs, the automaker said first-quarter earnings per share will exceed previous guidance of 25 cents to 35 cents and full-year automotive operating cash flow is still expected to be positive.

    The company will report its quarterly results on April 20 and said it will provide an overview of its future then.
     
  2. Malice

    Malice Guest

    :mamoru:

    My company has their health insurance contract
     
  3. Dr. Pnutz

    Dr. Pnutz Guest

  4. BLoG

    BLoG Scented Meat

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    ford's used to being in trouble :o
    It will be ok.
     
  5. TriShield

    TriShield Super Moderator® Super Moderator

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    It's just going to be Chrysler at this rate. :o
     
  6. UCFGavin

    UCFGavin Active Member

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    they'll bounce back
     
  7. BLoG

    BLoG Scented Meat

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    :ugh:


    They already got bought out by the Krauts, so they don't count :mamoru:
     
  8. Dr. Pnutz

    Dr. Pnutz Guest

    hopefully
     
  9. UCFGavin

    UCFGavin Active Member

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    also, the reason GM is struggling is because they haven't been able to produce anything worthwhile, other than the vette.

    At least Ford has a pretty decent product line
     
  10. Dr. Pnutz

    Dr. Pnutz Guest

    they merged :o
     
  11. TriShield

    TriShield Super Moderator® Super Moderator

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    They're the only US automaker gaining marketshare. :mamoru:

    Ford and GM can't operate like this forever, they'll collapse unless some radical action is taken.
     
  12. UCFGavin

    UCFGavin Active Member

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    they've been here before. this probably isn't the last time they'll be here either
     
  13. BLoG

    BLoG Scented Meat

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    They are still limping along with some terribly underperforming brands. Lincoln, Mercury, and Jaguar are all pretty lame lately.
     
  14. TriShield

    TriShield Super Moderator® Super Moderator

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    They're just as bad.
     
  15. BadRotation

    BadRotation New Member

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    well, maybe if they would start building affordable hybrids, then they wouldnt have this problem. The seem to still be on the SUV bandwagon, and with gas prices over $2.50 a gallon and steadily raising, not many people are going to was gas guzzlers anymore.
     
  16. TriShield

    TriShield Super Moderator® Super Moderator

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    Too many brands, not enough money.
     
  17. Toadster

    Toadster have you SHARTEEZED today?

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    fuckin Sarbanes Oxley is lifting the veil from big business... welcome to the great depression
     
  18. TriShield

    TriShield Super Moderator® Super Moderator

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    Ford couldn't even afford to produce a new V8 engine for the F-150. Meanwhile Chrysler and Nissan are further increasing the power in their trucks.
     
  19. BLoG

    BLoG Scented Meat

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    Better to scrap one engine than an entire range of rwd cars :mamoru:
     
  20. TriShield

    TriShield Super Moderator® Super Moderator

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    At least they were planning RWD cars. :mamoru:
     
  21. UCFGavin

    UCFGavin Active Member

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    :werd: they need to trim the fat, and I don't see why they wouldn't discontinue some brands instead of cutting across the board :dunno:
     
  22. Dr. Pnutz

    Dr. Pnutz Guest

    GM are selling hydrogen trucks to the army :hsugh:
     
  23. BLoG

    BLoG Scented Meat

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    Unlike GM, Ford has never given up on RWD completely :rolleyes:
     
  24. Dr. Pnutz

    Dr. Pnutz Guest

    They didn't scrap it, they slowed it down :hsugh:
     
  25. saboten

    saboten Chat With a Live Computer Repair Expert About Your

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    :love:

    gotta love the trusty old civic

    35mpg still and if its a bad crash... it makes sure i die instead of living my life as a cripple:bowdown::bowdown:
     

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