Ford warns, citing credit quality concerns...no $hit, lend people money at zero percent and Voila!...credit quality goes down the crapper! I'm pleased to note that they're such a quick study!<G>
quote.bloomberg.com
12/05 09:52
Ford Expects Wider Fourth-Quarter Loss Than Forecast (Update3)
By Bill Koenig
Dearborn, Michigan, Dec. 5 (Bloomberg) -- Ford Motor Co.'s fourth-quarter loss will widen, not shrink as it forecast two months ago, as the second-largest automaker raises reserves for bad loans and offers no-interest financing to compete with rivals including General Motors Corp.
The loss will total 50 cents a share before certain expenses and other items, the company said in a statement. Ford had forecast the loss would narrow from the 28-cent third-quarter loss, before items. The company had net income of $1.08 billion, or 57 cents a share, in last year's fourth quarter.
Higher unemployment rates and increased risk of consumer bankruptcies amid a U.S. recession prompted Ford to raise reserves for bad loans, Chief Financial Officer Martin Inglis said on a conference call with analysts. Ford also has been cutting jobs, trimming benefits and reorganizing its North American operation while using incentives to stem market-share losses to rivals including General Motors and Toyota Motor Corp.
``We have a very serious situation,'' Chief Financial Officer Martin Inglis said on a conference call with analysts. ``We are seeing some increase in repossessions.''
Ford shares fell 56 cents to $17.18 in early trading and have declined 27 percent this year.
The company is headed toward its first annual loss since 1992, and directors ousted Chief Executive Jacques Nasser in October and replaced him with Chairman William Clay Ford Jr. its U.S. sales have fallen 6.6 percent this year, more than three times the industrywide decline.
``It's much worse than people expected,'' Juan Carrion, a fixed-income analyst with Barclays Capital in London, said of the company's forecast.
Ford Outlook
Today's announcement is the fourth time since August that Ford has lowered forecasts. The company had a final loss of $1.44 billion the past two quarters.
Ford began offering no-interest loans in September, matching a move by General Motors to revive demand after the Sept. 11 terrorist attacks aggravated a decline in demand spurred by the recession. Ford's total sales surged 34 percent in October from the year-earlier month and 4.4 percent in November, when it trailed gains by both General Motors and Toyota.
The automaker previously said it will cut up to 5,000 salaried jobs by year end through buyouts and early retirements. Ford previously said it will record the cost of that program in the fourth quarter as a one-time item of about $700 million, or 40 cents a share.
Ford shares had declined 24 percent this year through yesterday, compared with a 2.2 percent decline at General Motors and a 1 percent increase for DaimlerChrysler AG's U.S. shares.
The automaker's credit ratings have been cut to their lowest levels since 1984. In October, Standard & Poor's cut Ford by two levels to ``BBB+'' while Moody's Investors Service lowered the company's ratings to ``A3.'' The price of a Ford Motor 6.5 percent bond due in 2018 has fallen 3.3 percent since Aug. 16 to 91.25 cents on the dollar, according to Bloomberg data.
Have you seen dat funny REPO man? |
