Today there has been some more shakeups over at Ford (F). Robert Rubin, former U.S. Treasury Secretary under Bill Clinton, has announced that he is going to be leaving Ford's board after six years of service. Rubin, who also serves on the board for Citigroup (C) said that the move was a result of potential conflict of interest between his roles with Ford and Citigroup. He made it clear that no such conflicts currently existed, only a possibility of future conflicts as the motor giant looks for ways to return to profitability.As Ford continues the hard road back into the green, Rubin will be sorely missed. According to a Ford exec, Rubin "brought strategic thinking to every situation and has been a wise and generous counselor to me and to the company. However, I understand and respect Bob's prudent decision to resign as we continue to explore future strategic options."
Ford has been aggressively attempting to turn the company around this year, announcing closures of up to 14 plants, and just last week announcing that it would be cutting automobile production by 21% during the fourth quarter of this year. Indeed it has been a tough year on the auto-maker. During the second quarter the company reported a $254 million loss and July numbers were way below what the company had been expecting.
So what is next for Ford?
There have been several rumors floating around, including one yesterday stating that the company may be considering going private to avoid dealing with Wall Street expectations while it continues to work towards profitability. There also appears to be interest in some of the company's luxury brands. These brands include the Jaguar, Land Rover, Volvo and Aston Martin brands. A private equity unit of JP Morgan Chase & Co. (JPM) has been named as a potential buyer of these brands. In another twist, Ford has also been looking at instigating talks with Renault and Nissan should those companies stall in their proceedings to work a deal with General Motors.
What I think is more likely is that the company could be looking to sell off part of it's credit arm, especially after hearing about Rubin's resignation from the board. Citigroup is already a strong player in the world of auto financing, and it is not too far fetched an idea to for see the banking company take over a sizable chunk of Fords financing business. In April of this year Citigroup was part of a $14 Billion acquisition in a 51% stake in the financing arm of General Motors Corp. (GM). While Citigroup already deals with Ford and their credit arm, today's move by Rubin could be the sign the company is looking to taking on a more material role.
Definitely a lot of changes going on over at Ford. What will the next move be? Well, we will just have to wait and see about that, but we should get a much better idea of what the company is looking to do after September 14th when the company's board is scheduled to meet to discuss further changes to their "Way Forward" plan of returning to profitability.
On Wall Street:
- Ford (F): +3.1% to $8.00 up $0.24;
- General Motors (GM): -1.8% to $29.33 down $0.55;
- Citigroup (C): -0.2% to $48.64 down $0.08
Will Rich Ross really have a positive impact on Disney's movie operations?
Consumers sick of recession, may spend extra on holidays
Corrections, seasonality and Santa Claus
Reader Comments (Page 1 of 1)
8-25-2006 @ 5:13PM
Allen Slowik said...
All those rumors mentioned are stop gap. The only way that Ford and GM can survive as a competive global company is to merge. Their rivalry was a competitive advantage for the foreign automakers. They wasted so much of their resources fighting each other when the competition was from abroad. It is time they united and became a strong American auto company.
8-30-2006 @ 6:51AM
James said...
I'm a small business owner in Michigan not far from Fords..
I Opened my printing co doors in 1986 but now I'm closing them. It's not that I want to but there's no choice.
Last one out please turn out the light. That is if the electric is still on.