Other Ford News
Ford poised to post big quarterly loss, cash burn in focus
4:44p ET January 28, 2009 (MarketWatch)
SAN FRANCISCO (MarketWatch) - Ford Motor Co. on Thursday is expected to post a fourth-quarter loss of almost $3 billion, with investors keying on the automaker's cash pile and whether it looks like the company will make good on plans to avoid a federal bailout.
The quarterly results arrive as the global auto industry faces unprecedented headwinds, and the U.S. market struggles through its worst sales stretch in decades.
All the major players, including the newly-crowned worldwide sales leader TOYOTA MOTOR CORP. , handed in hefty declines in the U.S. last month, leading to the lowest monthly tally in 26 years.
Ford posted sales of 139,067 cars and trucks in December, down 32% from 205,685 a year ago.
And this month and year could be even worse, with most analysts calling for very little relief throughout 2009 as consumers continue to grapple with a brutal economic climate.
"No doubt this was a really lousy quarter," Shelly Lombard, bond analyst at credit research firm Gimme Credit, said, "The third-quarter was bad and there's no way it got any better in the last few months of the year."
Lombard added that along with the cash burn rate, she'll focus on how Ford fared in markets like China and Europe as the industry struggles spread across the globe.
Despite all the hurdles, Ford has resisted following in the footsteps of rivals General Motors Corp. and Chrysler by hitting up the Treasury for low-cost loans.
Ford did, however, seek a $9 billion line of credit that it plans to use as an insurance policy against a deepening industry crisis. Questions remain as to whether the maker of the Blue Oval brand can hold out much longer should the industry continue to wilt.
The fourth-quarter results should go a long way in determining whether Ford is positioned to weather the storm. The outlook on Wall Street isn't exactly sanguine.
Analysts polled by FactSet Research are looking for a loss, on average, of $1.27 a share with sales falling off by a third to about $27.4 billion. Those numbers would put Ford's loss for the year to more than $7 billion.
On a somewhat positive note, Deutsche Bank analyst Rod Lache last week raised his rating on Ford to hold from sell, though he still maintained a cautious tone.
"While we remain concerned about the magnitude of Ford's recent and prospective cash burn ... we continue to believe that Ford has sufficient liquidity to withstand our base case downturn assumptions," he said in a note to clients.
During the first three quarters of 2008, Ford burned through $16 billion in cash, but still had reserves of $18.9 billion in cash and $10.7 billion in credit.
Lache said he expects Ford to burn through $11 billion in cash in the coming year prior to pension funding followed by another $2.6 billion in 2010.
The performance of the stock reflects the dire times, with shares having lost 70% of their value in the past year. GM has fared even worse, down 87% over the same time period.
