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Ford (F) making great cars -- but not in the U.S.

A report at Autoblog about Ford Motor Co.'s (NYSE: F) first crossover (CUV) model aimed at the European market generated some remarkable comments. Most readers were impressed with the new Ford CUV, called the Kuga, but were angry that it was so much better than anything Ford offers in the United States. A few typical comments:
  • While the new Escape looks like it emerged from the 1990s, this small SUV looks distinctly 21st century. Shame on Ford.
  • It's like if you want a decent American car, you have to move to Europe to buy one.
  • Ford, listen up. I love Fords. I always have. I love THIS Ford Kuga. Next time I go out to buy a car, it will not be a Ford - because you think I do not deserve the chance to buy the Kuga. And that, Ford is why your unit sales stateside are going to continue down the toilet.
  • Americans also don't particularly care about quality - just look at the pervasiveness of mcdonald's et. al. what do Americans like? a lot of cheap, style-free [expletive]. kinda like the escape.
  • Your home market deserves better, Ford. Stop slapping us in the face!
Of course, not all of the comments were negative. But most were, and I was impressed by how much negative feeling there is toward Ford and, presumably, the rest of the American auto markers. It seems that the mediocre design of American cars is a long-term problem for Detroit, one the Big Three will have to work hard to correct.

Liveblogging Ford Q2 earnings

Ford Motor Co. (NYSE: F) is slated to have a conference call regarding its Q2 earnings here in a few minutes. If you're ready to see the full results before the show gets underway, see this. Investors hope the results will show some strength for the world's third largest automaker on sales of its smaller Edge crossover and fleet vehicles. The automaker needs some good news to ensure its "Way Forward" plan under the helm of CEO Alan Mulally is moving forward according to plan. Did it make strides this past quarter?

Ford still posted some huge quarterly losses before it begins to make gains into the land of profitability sometime in 2009, according to Mulally. Until then, the company will continue reorganizing its business and paying huge operating expenses while it sets itself up to be more flexible and in-tune to customer demands that can shift almost immediately based on housing and gas prices. Those never fluctuate, right?

The automaker lost just over $12.5 billion last year and posted a loss of $282 million during Q1 this year, so the bets are on in regards to how large Ford's loss will be this quarter. Estimates range from $0.36 to $0.73, but given the enormous scope of changes in Ford's immediate backyard at the moment, I'm not sure any crystal ball could be an accurate predictor of any upcoming Ford quarters at this point. With that, here we go. Remember to use the "Refresh" key to ensure you see the minute-by-minute updates below. All times are in EST.

Continue reading Liveblogging Ford Q2 earnings

GM dealing with higher labor costs

General Motors is up nearly $1 so far today to $37.75 as of this post. An upgrade by J.P. Morgan is fueling today's rise.

Yet the road to recovery General Motors (NYSE: GM) continues to not be any easy one. In addition to plummeting sales in June for its U.S. operations, the company's recent share rally may be over in the face of labor worries once again. At least June sales for GM in India posted a healthy gain, or there would not be that much to talk about on the positive side for the automaker.

At the end of last week, GM shares took a downturn to the tune of more than 3% as investors sensed skittishness on the part of GM based on a downgrade from Bear Stearns from "peer perform" to "outperform." Again, union concessions from the UAW are to blame a bit, even in the midst of rumors that a more favorable labor deal may be on the way to GM, saving the automaker some cost as a result.

As has been the case for quite a while, higher labor costs continue to nip at the heels of both Ford (NYSE: F) and GM -- and it's something that most foreign auto competitors have avoided. Want figures? How about GM's $70/hour employee cost versus Toyota's (NYSE: TM) $40/hour employee cost? Yes -- both pay and benefits are factored in there. It's really not hard to see why GM has been (and probably will always be) at a cost disadvantage compared to the competition.

Top 25 for NEXT 25 Years: Color Kinetics offered $34 by Philips

The first company in my series of the top 25 stocks for the NEXT 25 years is about to be acquired. Color Kinetics (NASDAQ: CLRK) is being pursued by Dutch-based company Philips Lighting for $34 per share. The Dutch company is the world's largest lighting company.

The $34 per share offer represents a $688 million total acquisition price. Color Kinetics management has endorsed the deal and is encouraging shareholders to accept the offer.

Color Kinetics brings a rich portfolio of patents to the marriage. With 64 patents having been granted and another 100+ patents-pending, Color Kinetics brings to Philips the next generation technology of LED lighting products. Color Kinetics had won many high-profile lighting contracts recently, including the dash-board lighting work for Ford Motor Co. (NYSE: F). The new-generation LED-based lighting systems had not yet been economical for residential housing applications, but the market is indeed moving in that direction.

With Philips owning Color Kinetics technology, the residential market will be within its reach in the near future. Color Kinetics is selling to Philips for nearly 7 times revenues, a rich valuation, but certainly not when considering the growth rate of Color Kinetics, 35-40%, and its patent portfolio.

Oh well, we still have 24 companies left on the original list of 25 stocks for the NEXT 25 years...

Georges Yared is the CIO of Yared Investment Research.

Chrysler and GM: Makes no sense

The Editorial director of Automotive News is claiming that General Motors Corporation (NYSE:GM) and DaimlerChrysler AG (NYSE:DCX) are in serious discussions for GM to acquire the Chrysler division from DCX. You gotta be kidding.

GM has its own share of issues to work out. Why compound its problems with a failure like Chrysler? If Daimler cannot make it work -- and it has the resources, manpower and expertise -- what's going to allow GM to make it work?

The inevitable question will be: Can one plus one make three in this potential scenario? GM, and Ford Motor Company (NYSE:F) have been losing market share to the Japanese car makers on the low end-to high end markets, not to mention the small truck and SUV market. Chrysler has not been exactly setting any new sales records itself.

If GM were to absorb Chrysler, the initial upshot would be instant market share gains, but are they sustainable and more importantly, profitable? If Daimler couldn't make it a go in the USA with Chrysler, in spite of all the so-called cultural clashes within DCX, what's going to make GM successful? I don't think so...

Georges Yared is the author of "Baby Boomer Investing...Where do we go from here?" and "Stop Losing Money Today." For more info on both books go to http://www.georgesyared.com

From Chevys to Toyotas in one generation

The news coming out of Detroit these days is sickening. Not so surprising, maybe, but nauseating nevertheless. The bloodletting at Ford Motor Company (NYSE:F) and the woes at General Motors (NYSE:GM) is like watching a train wreck in slo-mo.

But it's not surprising. With the SUV craze finally on the wane (thanks to gas prices that are only going to go up from here), Detroit doesn't seem to understand what regular folks want to drive: Well-made, fuel efficient cars. Doesn't hurt if they look cool, too.

Somehow Toyota learned that lesson a long time ago. What's extremely ironic is that its quality and production principals were learned from a U.S. Army education program during the Post-war era.

Whereas my parents, who came of age in the '50s, would never dream of driving a Japanese-made car, I learned to drive on a Toyota and would never drive anything else (OK, maybe a Honda...or a Beemer). My only experiences with American-made cars -- rentals all -- were less than impressive. And judging from Detroit's latest sales figures, I'm not the only American driver who doesn't like sluggish, gas-guzzling vehicles.

Toyota clearly sees the future. Jim Cramer's been jumping around about the stock for a while now, and all he cares about is the bottom line. Is there any hope for the fat, ugly Americans?

Ford CEO reshuffles executive management

Looks like new Ford CEO Alan Mulally has made his first executive level move at Ford. With a penchant for finding operational inefficiencies and with the job of cutting fat off a laggard automaker, Mulally has tapped Derrick Kuzak to run product development for the entire company instead of just the U.S. Hey, that's 'going global' in a sense, yes?

As industries have changed from segmented, hierarchical silos that have disconnected strategies on global product development and marketing, Mulally apparently wants to get Ford in league with other companies who have a cohesive global strategy and the savings that come along with that. Mulally said, "An integrated, global product development team supporting our automotive business units will enable us to make the best use of our global assets and capabilities and accelerate development of the new vehicles our customers prefer, and do so more efficiently."

It was no surprise that Mulally is making changes this early, as he indicated in an interview with Forbes recently that the company had too many teams working on similar products. This means that Mulally is a change agent for the better, something Ford needs as its costs spiral out of control. In what I consider an ultimate statement of why Ford needed to relearn the cost sensitivity of its customers, Mulally said "Ford has grown up as very independent, different Fords ... different teams do each car, so they are different. And a lot of that complexity customers don't want to pay for."

Roger that, Alan.

DaimlerChrysler plays the China card

Just call it an eastern hemisphere hedge for DaimlerChrysler AG (NYSE: DCX).

DaimlerChrysler announced Thursday that it plans to buy 297 million shares of China's Beiqi Foton Motor Co. LTD at 2.75 yuan per share for 816.7 million yuan or about $104 million. Those 297 million shares would represent a 24% stake in Beiqi Foton

Beiqi is China's largest truck maker, and one analyst/economist who follows European / Asia business and trade flows says Daimler's investment is both a hedge and a potential solid-win tactic.

"You have to like this move," said David Chandler, analyst/economist with the Econometrics Group. "Daimler gets a potential low-cost production source for medium and heavy trucks, while at the same time better-positioning itself in the promising Chinese truck market. There are always opportunity costs when you invest, but very rarely does a company get this type of hedge / market opportunity for $100 million. It's a bargain and a solid move."

Chandler said Daimler trails General Motors Corporation (NYSE:GM) in joint-venture deals with China-based companies, so the Beiqi deal represents progress against a major U.S. competitor, as well.

DaimlerChrysler's shares traded slightly lower Thursday at mid-day, down 15 cents to $58.29. Meanwhile, General Motors was down 43 cents to $29.07 and Ford Motor Co. (NYSE: F) had dipped 2 cents to $8.14.

Investment Analysis: The best way for the typical investor to play DaimlerChrysler? Investors who can tolerate a moderate level of risk should buy DCX now, in stages, over the next two weeks: 50% of your position today, 50% next week. Conservative investors -- those who can tolerate only a low level of risk -- should wait and see if DCX pulls back to $56. If it does, and bounces off $56, consider adding a small amount of shares to your portfolio.

Joseph Lazzaro is a news editor at Theflyonthewall.com (subscription required), based in New York.

Bush, U.S. Automakers sit down for "heart-to-heart" talk

Top executives from General Motors, Daimler-Chrysler and Ford met with President Bush to discuss the state of the American auto industry in light of all the recent financial mishaps and pension situations that continue to drain cash from the industry and starve it of profits, while foreign competition -- without all this baggage -- continues to design better-looking vehicles and sell their image of reliability more effectively than ever.

President Bush, Vice President Dick Cheney, and other administration officials met in the Oval Office for just over an hour with top executives of Ford, General Motors, and DaimlerChrysler AG's Chrysler Group yesterday to talk about what to do as U.S. automakers continue to face obstacles that don't make for a level playing field in a global automobile selling and manufacturing economy.

Execs from the "Big Three" told reporters they'd had a good meeting. Newly minted Ford CEO Alan Mulally stated "The president clearly understands the importance of the business to the United States and the global economy." The auto executives heavily emphasized their concerns on health care and trade issues but also stated that the troubled American auto industry does not want a federal bailout like what has happened in the airline industry recently. If not, big solutions should be just around the corner.

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Last updated: May 28, 2012: 02:41 PM

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