You have to hand it to Ford Motor Co. (NYSE: F) -- despite losing a record $14.6 billion in 2008, it steadfastly refuses to take government money. Personally, I wish more American companies had that attitude. Unfortunately, it could be a matter of months before deteriorating sales force Ford to join its peers at the taxpayer trough.
How bad were Ford's results? Ford lost $5.9 billion, or $2.46 a share, in the fourth quarter alone, compared with a loss of $2.8 billion, or $1.33 a share for the same period in 2007. Due to tight credit markets, buyers stayed away from dealers its sales fell 36% to $29.2 billion. And after adjusting for special charges, Ford lost $1.37 a share, seven cents less than analysts expected.
The good news is that Ford has some cash. Specifically, it ended 2008 with $24 billion in cash -- having burned through it at a $2.4 billion a month clip. At this rate, it has 10 months' worth of cash and it plans to draw down a credit line for further "liquidity."
Unfortunately, 2008's result was the worst in its 105 year history -- it topped its 2006 record loss of $12.7 billion by $1.9 billion. And if sales keep dropping at 36%, 2009 could be even worse.
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book is You Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing. He has no financial interest in Ford securities
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Reader Comments (Page 1 of 1)
1-29-2009 @ 12:18PM
BHarrison said...
In 1992 Ford changed the production tire size for my Lincoln Mercury car that I had bought. Due to an alignment problem, I needed to change the front tires; but no car dealer would mount the original size tire because the trade publication listed the newer larger tire for that model. Ford wasn't willing to "make an adjustment" for replacing all four times (as was then being required) . . . . I've never bought another Ford product since then.