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Old 01-25-2007, 09:24 AM   #1
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Ford Loses Record $12.7 Billion in ’06

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DEARBORN, Mich., Jan. 25 — The Ford Motor Company had the worst year in its history in 2006, losing $12.7 billion and suffering sharp erosion of its share of the United States auto market.

Ford lost $5.8 billion in the fourth quarter alone, the company reported today. In the same period a year earlier, it lost a comparatively trivial $74 million.

The company took in $160.1 billion in revenue in 2006, 9 percent less than in 2005.

Ford’s full-year loss, equivalent to $6.79 per share, far exceeds the $7.39 billion it lost in 1992, the worst previous year in its history, and it even surpasses the $10.6 billion loss posted by General Motors in 2005.

Most of the red ink in the latest year was produced by the cost of shrinking and reorganizing the company, buying out workers and writing down asset values. Those charges accounted for $9.9 billion of Ford’s full-year loss after taxes. But Ford’s day-to-day business did very poorly as well, with a loss of $2.8 billion on continuing operations, compared with a $1.9 billion loss in 2005.

The figures were an unwelcome surprise to many Wall Street analysts, who on average had forecast a loss of about $2.5 billion for the year, excluding special items such as restructuring charges.

Ford’s woes are greatest in North America, where its automotive operations lost $6.1 billion before taxes and sales revenue fell by 14 percent, to $69.4 billion. The North American loss, four times as bad as the year before, more than wiped out profits from automotive operations overseas.

The fourth quarter of 2006 was the first full earnings period for Ford under its new chief executive, Alan Mulally, who was hired away from Boeing in September. With Mr. Mulally at the helm, Ford took the unprecedented step of pledging nearly all of its United States assets, from its factories to its blue oval logo, as collateral to borrow more than $23 billion. The company had never had to borrow that way before.

Mr. Mulally told analysts at a conference held near Ford’s headquarters earlier this month that its effort to overhaul itself, known as the Way Forward, is running “ahead of schedule.” But the company’s financial results have yet to give any sign of progress, and its regulatory filings indicate that no improvement is expected in early 2007.

“We began aggressive actions in 2006 to restructure our automotive business so we can operate profitably at lower volumes and with a product mix that better reflects consumer demand for smaller, more fuel efficient vehicles,” Mr. Mulally said in a statement this morning. “We fully recognize our business reality and are dealing with it. We have a plan and we are on track to deliver.”

About 40 percent of Ford’s hourly workers — some 30,000 employees — have agreed to leave their jobs this year in exchange for buyout or early-retirement packages, and the company is also shedding about 14,000 salaried positions. Those cuts, along with plans to close nine plants by the end of next year, are part of the Way Forward plan, which is meant to return the company to profitability in North America by 2009.

Ford expects to lose its grip on second place in the American market sometime this year, when it is overtaken by Toyota. Ford’s market share has fallen to 17.5 percent last year, from 25.7 percent a decade ago. By the end of the year, Ford’s internal projections show that the company may even fall to fourth place, behind Toyota, the Chrysler unit of DaimlerChrysler and General Motors, the market leader.

Mr. Mulally caused a stir in Detroit last month when he flew to Tokyo to meet with Fujio Cho, the chairman of the Toyota Motor Company. Mr. Mulally said he asked for Mr. Cho’s advice on ways to streamline Ford’s manufacturing operations, and the that the two men had discussed cooperation on some technical matters.

But Mr. Mulally could well have sought Mr. Cho’s financial counsel, too, because the Ford loss for 2006 happens to almost exactly match the profit Toyota earned in 2005. That means there is a difference of more than $25 billion between the two companies’ financial performances.

The biggest blow to Ford in recent years has come from rising gasoline prices, which depressed sales of the big pickups and sport utility vehicles it depends on for profits.

Ford’s financial deterioration has caused something of a brain drain at the company, and the arrival of Mr. Mulally has been expected to prompt some other executives to leave as well. News reports this week in Detroit suggested that despite its huge losses, the company may be planning to pay bonuses to some executives to persuade them to stay on.

Ford said today that no decision has been made on bonuses. It did not pay any in 2005.
http://www.nytimes.com/2007/01/25/bu...rtner=homepage

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Old 01-25-2007, 09:27 AM   #2
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I just read that. Not good.
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Old 01-25-2007, 09:35 AM   #3
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where is all thier money going? didn't they just got done laying off like 75,000 people and cutting everyone's benefits retiree benifits????? i just don't get these big companies when they say they "lossed" that much money. after all, all the top execetutives always get thier bonus' and profits before the consider the rest of the actual workers that make them all their money.
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Old 01-25-2007, 09:39 AM   #4
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It takes a little time to recoup from a massive re-org. I hope Q1 for 2007 will be a lot better, but if it isn't....
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Old 01-25-2007, 09:41 AM   #5
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Quote:
Originally Posted by OrangeSVTguy View Post
where is all thier money going? didn't they just got done laying off like 75,000 people and cutting everyone's benefits retiree benifits????? i just don't get these big companies when they say they "lossed" that much money. after all, all the top execetutives always get thier bonus' and profits before the consider the rest of the actual workers that make them all their money.

did you actually read the article?

Quote:
Most of the red ink in the latest year was produced by the cost of shrinking and reorganizing the company, buying out workers and writing down asset values. Those charges accounted for $9.9 billion of Ford’s full-year loss after taxes. But Ford’s day-to-day business did very poorly as well, with a loss of $2.8 billion on continuing operations, compared with a $1.9 billion loss in 2005.
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Old 01-25-2007, 09:44 AM   #6
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And we wonder why everyone is buying imports.
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Old 01-25-2007, 12:29 PM   #7
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wow...and everyone in 05 thought Gm was going to go bankrupt.

They should add what it cost to the design and make the new 2008 Focus to that 12.7 billion.....because that was a waste of money.
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Old 01-25-2007, 12:32 PM   #8
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true true
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Old 01-26-2007, 12:10 AM   #9
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Yeah, it sucks. Glad I chose to take the BMW tech program and not the Ford tech program.
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Old 01-26-2007, 03:30 PM   #10
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I've been wondering what happens to the warranty and parts if Ford goes under. I might not have bought my 2006 Focus if I had know just how bad things were at Ford. Actually everyone in my family drives Ford vehicles.
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