As their hometown automakers sink into the miasma of disaster, The Detroit News' efforts to put a positive spin on Motown's woes is beginning to gain the force of farce. Slightly less poetically, they're missing the point. In today's report, Ford's third quarter $380m loss was painted as a victory, you know, compared to Wall Street's expectations and last year's $850 red ink stain. Or North America's pre-tax loss of $1b, compared with last year's pre-tax loss of $2.1b. The paper duly published FoMoCo CEO Alan Mulally's spin on the numbers, which claimed "We can see our plan taking hold with significant improvement continuing in our core automotive operations." And did you know that Ford has stabilized it's U.S. market share? News to me. To be fair, or in at least an attempt to be fair, the DTN also sounded a note of caution– albeit one attributed to a bunch of someone else's. "Ford, which is in the midst of one of the broadest restructurings in its 104-year history, is struggling to meet its target of restoring profitability no later than 2009. Many analysts still see that as a stretch goal for a company that lost $12.6 billion last year." It may come as no surprise, but you can add our name to that list.
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Those are some heavy losses…but didn’t I just hear somewhere that GM lost something like $37 billion last quarter alone?
Ford is on the same downward spiral as is GM and Chrysler/Cebrus its just “spin” on there CEO’s part in my estimation
Joseph:
https://www.thetruthaboutcars.com/?p=6235
How quickly yesterday’s news scrolls off the ticker!
Gentle Ted, doesn’t downward spiral mean things are getting worse? (i.e. a bigger loss every year?) I would say they are more in a hovering spiral.
Aww, come on. Let’s give a little credit to Ford (insert your own finance joke here). Their losses aren’t as heavy as last year, which shows they’re stepping in the right direction. Plus, they did state, quite clearly, that profitability would come no later than 2009. Let’s judge them then.
The only bit which confuses me, is where Mr Mulally said “We’ve stemmed our losses on US market share”. So, November’s sales figure shouldn’t report a loss, then? Only 22 days before we find out……!
Katie, RF:
Ford is saying their retail market share has stabilized at 13%. The fleet sales are expendible, according to their plans…
http://money.cnn.com/news/newsfeeds/articles/djf500/200711011407DOWJONESDJONLINE000969_FORTUNE5.htm
Joseph: but didn’t I just hear somewhere that GM lost something like $39 billion last quarter alone?
That’s a big number for 1 quarter, but was an accounting charge. i.e. expenditures did not out pace revenue by $39B.
What happened was that GM had accumulated $39B in tax credits over the years and was carrying them forward on their books expecting to use them to offset tax liabilites some day. Well, when you don’t make a profit, you don’t pay taxes on corporate income so the tax credits weren’t being utilized and actually made the balance sheet appear better off than it actually is. They removed the credits as they probably have an expiration date anyway (can only be carried forward so many years from inception). When they removed them , they suddenly have a loss ..
It’s called bootstrapping. Ford insiders say in another publication that their retail market share has stabilized. The CEO of Ford makes the same claim and validates it with that.
These are supposed to be leaders and speak frankly. Instead the bosses spin their news so badly they’d give O’Really? and Nancy disGrace a run for their money.
I was wrong in my figure…GM has lost $39 billion. TTAC has the correct info if you follow the link that starlightmica posted:
https://www.thetruthaboutcars.com/?p=6235
When I posted, I had not seen TTAC’s article yet. That’s one of the reasons that I like TTAC so much. As soon as I’ve heard something somewhere, TTAC is all over it ready to report on it with better info than I had in the first place.
This news is better than the plan to get profitable by 09. So, when you plan to be losing money while restructuing, and lose less than planned, IT IS good news. It means that retail market share is stabalizing, and increased revenue means the vehicles selling are of "richer mix" and more profitable. You must understand the plan TO CUT production before claiming lost volume is a huge problem. Anyone that can understand an earnings call, etc, knows this isn't just spin.
Well, Ford’s big problem is going to be 2008, when the recession hits big, and hits hard.
Actually, GM and Chrysler may not survive, either.
Why do I think there’s going to be a recession?
Well, everything went to cr*p yesterday.
November 7 is going to go down in US history as another day of infamy.
The Chinese essentially are pulling the rug from under the idiocy of the US depending upon an enemy for financing a war, and continuous deficits. They aren’t going to just buy our national bonds “automatically” any more…
The national debt exceeded $9 TRILLION yesterday. It “only” took from George Washington to Ronald Reagan to get $1 Trillion in debt, then 27 years later, we’re $9 Trillion in debt?!
Oil exceeded $98 a barrel yesterday, up almost $1 per day for over a week, more or less.
Gold exceeded $830 per ounce (one partial translation: the value of the dollars in our pockets plummeted by over 60% compared to Gold in one decade). Gold is the only true money that’s lasted over 6000 years. Everything else is monopoly money any more (fiat currency). Magic! Nothing supporting it!!! Uh oh, it just fell….
The value of the US dollar vs. virtually any other currency has dropped about 35% in a matter of only a couple of years.
Our esteemed government has been lying to us about the money supply (they’ve stopped publishing the M3 over a year ago), and the true inflation rate is about 13% not 2%. This has been going on since Carter’s administration.
The subprime housing mess is going to chop the US economy (and therefore, world economy) off at the knees. It’s just that it’s going to take awhile to see the results of the sh*t hitting the fan.
NOTE: I have banned RLJ676 from posting on TTAC. Despite being warned, he chose to post comments that were disrespectful (flaming) to this website and fellow commentators. We will have civilized debate or we will have none at all.
Ford’s results actually were quite good.
Automotive operations improved YOY losses in the quarter by over $1 billion worldwide ($1.1 of that in NA). Basically, Ford is on track to save over $4 billion this year, which will drastically help their operations. Revenues were up for the quarter (41.1 versus 37.1 billion), which I think was the biggest surprise of all.
Ford’s overall profit/(loss) before special items was ($24 million). For the year, excluding special items, Ford is on track to run about break-even (maybe down a little). Pre-tax, it looks like they may even MAKE money this year. Considering their operations lost them $5.5 billion last year WITHOUT special items, I’d judge that as an incredible improvement on the financial side of things.
Finally, they expect to end the year with as much cash as they started the year at, which is definitely a good sign. Probably the best info in the quarterly earnings was that they expect the restructuring to cost almost $5 billion less than originally thought. That means they have far more cash than they actually need and frees them up to speed product development, add investments in non-core products and lines and start converting debt early.
It was still a loss, but all things considered, it was a very good earnings report relative to the state of the company, no matter how you try to spin it.