Ford Shares Tank on Worse Than Expected Earnings Results Shares of Ford Motor (F) headed sharply lower after the company released disappointing quarterly earnings on Friday. In midday trading on the New York Stock Exchange, Ford stock was down 13.5% to $16.31 a share, as investors reacted to news about higher commodity prices and other expenses that resulted in the company reporting earnings about 18 cents-per-share lower than analyst expectations.

Excluding one-time items, the Dearborn, Mich.-based automaker posted an operating profit of 30 cents a share in the fourth quarter, well below the 48 cents analysts had forecast.

The quarterly results marked the first time Ford fell short of Wall Street profit forecasts in two years, Reuters reported. "Anything that comes out that's a tad disappointing, even if it's a tad disappointing inside a great story, is going to be punished," Bernie McGinn, chief investment officer at McGinn Investment Management, told the news agency.

The point wasn't lost on CEO Alan Mulally and Chief Financial Officer Lewis Booth during a conference call with investors and the media shortly after earnings were released. Both executives said the company needs to do a better job at providing earnings guidance to the investment community.

"We felt like we provided some very good information on the fourth quarter," Mulally said, adding that the miscommunication would "[motivate] us to further help people really understand where we going in the future."

Miscalculations on Europe, Commodities


Ford's earnings fell short in part due to expectations that Ford's European operations would turn a profit in the fourth quarter. That turned out not be the case. The company reported it lost $51 million in Europe during the three months that ended December as Ford's share of the market declined to less than 8% from nearly 9%.

The drop was a result of Ford's decision to not discount vehicles to boost sales in some regions, as well as the discontinuance of some European nations' so-called scrappage programs -- similar to the U.S.'s "cash for clunkers" rebate program in 2009, which had helped boost small-car sales in Europe, Mulally said.

The rising costs of commodities such as steel also pulled Ford's earnings down. Ford's costs increased by more than $1 billion in the fourth quarter compared to the previous quarter, subtracting profit of about $860 for every car and truck it sold, Reuters noted.

Overall quarterly earnings were also hurt by Ford's decision to spend more on new-product introductions, including the 2011 Ford Explorer sports-utility vehicle, which went on sale in the U.S. last month. Mulally said the company increased outlays for advertising and marketing as the end of 2010 neared "because we saw a real opportunity to get these products off to a great start."

Profit-Sharing Bonuses for 40,600 Workers


The fallout from the disappointing earnings overshadowed an otherwise upbeat report from Ford, which reported its best annual profit in a more than decade -- $6.6 billion. The automaker also saw its share of the overall U.S. car market rise to 16.4%, 1.1 percentage points higher than in 2009.

Ford said as a result of its financial performance in 2010, some 40,600 U.S. full-time hourly employees would be eligible for profit-sharing payments of about $5,000.

The company also boosted its estimates for overall U.S. sales of cars and light trucks to an industry total of 13 million to 13.5 million, up from previous forecasts of 12.5 million. Ford also raised its expectations of its North American production in the current quarter to 650,000 from 635,000.

Ford said it reduced its debt by $14.5 billion in 2010, cutting its annual interest costs by more than $1 billion. Mulally said improving the company's balance sheet remains a priority, but he wouldn't speculate about how long it would take the company to again return to an investment-grade credit rating.

Ford last had an investment-grade rating in 2005, a year before it mortgaged most of its assets to borrow $23.5 billion to finance its restructuring plan. The decision to take on massive debt gave Ford a head start on revamping its business and helped it avoid the stigma of government ownership that looms over rivals General Motors (GM) and Chrysler Group.

Ford was the only Detroit Three automaker to avoid a government bailout in the aftermath of the 2008 financial crisis.



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spike

I have an F-150 triton V8.It gets 18 miles to a gallon.It rides like a cadilac and runs beautiful.My son has a ford escort.It has been in the family for 17 years.It looks a little ragged,not bad,but;runs great..The escort gets 25 to 30 miles per gallon.I don't have brand loyalty at all,but,my ford experiance has been all good.I wish I could say as much for my import experiance.Go Ford and you won't go wrong.

January 30 2011 at 2:50 PM Report abuse rate up rate down Reply
customlawnil

Ford trucks are the best - I own four.

January 30 2011 at 9:26 AM Report abuse +1 rate up rate down Reply
jayk4usa

I do like ford but in the long run they will not be as competitive as the rest of the automobile industry. no bailout no clean slate, also ford did not have the same cuts as gm and chrysler. Really the only reason they are doing good now is they did not take bailout,the bailout will soon be forgotten and ford will be left with all there debt and since they did not have same cuts they will not be competitive with rest of industry. sell your ford stocks soon and buy gm there vehicles are now awsome and they have no debt. that insures profitability for years to come. sorry ford if you were smart you would of took bailout. i will support your bailout in years to come.

January 30 2011 at 8:41 AM Report abuse rate up rate down Reply
1 reply to jayk4usa's comment
Danny

I heard many cons say the would not buy anything except a ford because gm and chrysler took the bailout. Well they took their tax refund and went to the used car dealer and bought a ford. These same people do this ear after year because the ford they bought the year before has already crapped out. They also have a kid every year because they don't belive in birth control so they get several thousand dollars and part of it goes to the tea party to elect fools like themselves.

January 30 2011 at 2:12 PM Report abuse rate up rate down Reply
Annette

Google Ford!!

January 30 2011 at 7:58 AM Report abuse rate up rate down Reply
Paul FIQUET

IS TANK AN ENGLISH WORD ? A TANK IS A MILITARY VEHICLE I THOUGHT.....

January 30 2011 at 7:56 AM Report abuse rate up rate down Reply
1 reply to Paul FIQUET's comment
alfredschrader

No it means tank as in toilet tank see Wiki - Flushometer.

The economy had nothing to do with the bailouts. They are clinging to the past still building gas guzzling lead sleds. Yes, these have their place, but flexible manufacturing is the way to go. You need to be able to shift to another model product as the marketplace changes. Fossil fuel supplies are going to decline. You can't suck things out of the ground & expect it to last forever. During the last shortage Toyota was running the Prius lines 24/7 .
Gone are the days when you built a car or truck & shoved it down the marketplace's throat. You have to sell what people need or want.
I'll say it again, you have to use flexible manufacturing with technology that lets you build different products in the same plant by changing your software . In 2009 I went to my Ford dealer & said I wanted to look at Ford Hybrids, he said "Oh, we can't get those". But, what really gets me is I invented something even better called the Strobe Drive that is even more efficient than a Hybrid & I offered it to the big three for free, yes free. They told me to get lost....Al-

January 30 2011 at 12:08 PM Report abuse rate up rate down Reply
prudyl

Who are these people who spend all their time worrying about the ups and downs of a zany stock market? If you like a business, invest. If you don't, don't buy it at all. If you really just want to gamble, there is a casino within driving distance.

January 30 2011 at 5:56 AM Report abuse rate up rate down Reply
aaran1950

The problem is that the analysis do not know all. There crystal ball sometimes have clouds in it.

They should be out on the front lime fighting the day to day battles that the employees of Ford are fighting! Then maybe they could wise up.

GO FORD!

January 30 2011 at 5:35 AM Report abuse +1 rate up rate down Reply
enpassant44

I own Ford stock, and I think the 13.5% drop was an overreaction. I bought more Ford stock at the low of the day. Ford stock will come back.

January 29 2011 at 10:58 PM Report abuse +1 rate up rate down Reply
1 reply to enpassant44's comment
Danny

So will the Falcon,Edsel,and Mercury when Hell freezes over.

January 30 2011 at 2:16 PM Report abuse rate up rate down Reply
bdevine921

Love Fords..Had two Ford Mustangs. Sold them both when they hit around 155k miles...my convertible was kept on the dealership lot because it drove and looked brand new and was sold within a few weeks. My other Mustang I sold to a teenager who's parents commented that it looked brand new and ran great. First pair of new breaks I put in just prior to selling..150k miles. My husband still has his 1994 Ford Ranger King Cab 4x4 pickup. Looks great still and runs well. Very little other than regular maintenance and a few minor repairs he did himself...240k miles on it...and he plans to keep it until it dies...My son has an older Lincoln Continental 1997 which still looks nice (grandfather left it after he passed) and runs well. I have no problem with Fords at all....Next car will be a Ford in all likelihood. Keep on keeping on Ford.:)

January 29 2011 at 10:53 PM Report abuse +1 rate up rate down Reply
1 reply to bdevine921's comment
Danny

It is spelled BRAKES ANOT BREAKS. Hillbillys haul their billygoats in Fords.

January 30 2011 at 2:20 PM Report abuse rate up rate down Reply
walkin07

Oh, the poor dears. Only a $0.30 per share profit, instead of the $0.48 projected. The rising cost of commodities points towards the inflation that no one is acknowledging. Wait until gas spikes again, due to the trouble in Egypt,and consumer confidence tanks.

January 29 2011 at 9:32 PM Report abuse rate up rate down Reply
1 reply to walkin07's comment
jbmcjbm

commodities are sold bought by super computers. Computers stealing peoples' money day in day out.

January 29 2011 at 10:08 PM Report abuse rate up rate down Reply