Ford: Q4 Will Be Even Worse

It's going to get worse for Alan Mulally before it gets better. On Oct. 23 the new Ford Motor CEO—officially in the job for less than a month—had to preside over a dismal third-quarter earnings report in which Ford posted a $5.8 billion loss, its biggest one-quarter loss since the recession of 1992.

We know it will get worse because Ford (F) said so. The company stated that its fourth-quarter earnings will decline as it cuts production, watches SUVs pile up on dealer lots, and continues to pay employees to leave the company.

That will put a strain on Ford's cash flow, though Chief Financial Officer Don Leclaire made a point on Monday of saying several times that Ford's cash was adequate to meet the challenge. The automaker had a negative cash flow of $3.1 billion in the quarter, but ended the period with $23.6 billion on hand after it transferred $3 billion from the automaker's VEBA (Voluntary Employee Benefits Assn.) fund. "[Ford's] balance sheet is liquid, but we expect it to deteriorate…[and bond] ratings are likely to go lower," says Shelly Lombard, an analyst at Gimme Credit.



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rocker - 10/24/2006 11:31:00 AM

0 Boost

I'm sure the new CEO has a huge compensation package that is based solely on performance(riot).

lewissalem - 10/25/2006 2:05:13 PM

0 Boost

Ford must learn to take risks. People are protective of their jobs because of the layoffs. This breeds a conservative nature in the company culture. The car guys are not in charge. Please Ford, sell your best products over HERE, not in Europe. Follow GM's lead with Saturn.