Thursday, January 25, 2007

Ford Posts Wider Than Expected Loss

January 25, 2006

Ford Motor Company, a satellite radio partner of Sirius, posted their worst loss on record. The loss of $5.8 Billion as compared to a loss of $74 Million a year ago. Slumping sales and employee buyouts account for large parts of the loss. Ford, similar to other U.S. Auto Makers is in a battle for market share, while trying to restructure at the same time. While assumptions that this will impact Sirius are often made, that opinion is ill conceived. Fords production has only been trimmed by 10,000 for Q1, and they anticipate more production for 2007 than they had in 2006. Further, Ford targets a specific number of installs for satellite radio in order to earn warrants, and thus it would be in their best interest to install enough receivers. In the past Ford has bundled longer term Sirius subscription plans (as long as 3 years) as an incentive for buyers.

Reuters Story Excerpt:

DETROIT (Reuters) - Ford Motor Co (NYSE:F - news) on Thursday capped the worst year in its 103-year history with a deeper-than-expected fourth quarter loss and said it would cut its production for the current quarter and lose market share through September.

The No. 2 U.S. automaker posted a fourth-quarter net loss of almost $5.8 billion, or $3.05 per share, on declining sales of its profitable trucks and charges for employee buyouts. That compared to a loss of $74 million, or 4 cents per share, a year ago.

Ford's loss from continuing operations was $1.10 cents a share, which was wider than the average Wall Street analyst expectations of a loss of 94 cents per share as tracked by Reuters Estimates.

The company posted a record loss of $12.7 billion for 2006, leaping past Ford's previous record net loss of $7.39 in 1992.

Ford shares slipped initially in pre-market trade and then recovered to be unchanged from Wednesday's close of $8.20 on the New York Stock Exchange.

Ford, which is in the early stages of a four-year turnaround plan that includes closing 16 plants and cutting up to 45,000 jobs in North America, said charges reduced fourth-quarter results by $3.7 billion after taxes, or $1.95 per share.

Ford expects its U.S. market share will fall through the third quarter as it pulls back from sales to car rental companies and other fleet operators.

The company suspended its practice of providing detailed financial forecasts a year ago.

The Dearborn, Michigan-based automaker also said its production would be down through the first half of the year but increase on a year-over-year basis in the second half.

Ford cut its previously-announced first quarter production target in North America by 10,000 units to 740,000 vehicles, a 15.5 percent decline from the same quarter a year ago. MORE HERE

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1/25/2007 09:02:00 AM

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