A flurry of developments at Ford Motor makes the company seem in even worse shape than bigger rival General Motors.
The latest: Ford (F) reported in a filing with the Securities and Exchange Commission late Wednesday afternoon that it lost more money in the second quarter than it previously reported — $254 million instead of $123 million. Ford said it had changed its estimate of pension-related costs.
That brought the automaker's losses for the first half to $1.4 billion, vs. a first-half profit last year of $2.1 billion.
GM (GM), by contrast, reported a net loss of $3.0 billion the first half, but — delighting Wall Street — said it made an operating profit of $1.2 billion the second quarter if the big costs of employee buyouts and other restructuring costs were set aside.
Ford also said in the SEC filing that its Premier Automotive Group — Jaguar, Volvo, Land Rover and Aston Martin — would lose money this year instead of breaking even, as previously forecast.
Jaguar, puzzlingly, is the drag.
"The past 10 years we've seen growth in the luxury and premium market. Growth in sports cars, different kinds of niche vehicles. Vehicles that appeal to people that have extra money. While all these other companies have been exploding, Jaguar has gone nowhere," says George Magliano, an analyst with Global Insight.
Earlier Wednesday, Ford announced hiring former Goldman Sachs banker Kenneth Leet as a strategic adviser to CEO Bill Ford.
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Ford's announcement said that "Leet will report directly to Bill Ford and work closely with senior management in exploring a broad range of strategic alternatives for the company." Talks with Leet had been going on about two weeks, Ford said.
Ford Motor, founded by Henry Ford, still is controlled by the Ford family. "Having people from the outside can help," says Stefano Aversa, COO of AlixPartners, an international turnaround consulting firm based in Michigan. "It is more difficult for a family business to achieve a turnaround," he says, because the family is personally involved, not professionally detached.
Ford spokesman Tom Hoyt pointed out that in a question-and-answer session July 20 after Ford announced second-quarter earnings, Bill Ford said "all aspects of the business are on the table." However, Hoyt said, Ford also said the company had no plans to sell any of its brands or the profit-making Ford Motor Credit financing arm.
A report Wednesday in The Wall Street Journal, relying on unnamed sources, said that Leet would specifically look at selling Jaguar and Ford Motor Credit and forming alliances with other companies to cut costs. A source with knowledge of Ford's talks with Leet, but who didn't want to be identified because details weren't being released, confirmed that report to USA TODAY.
"It's a very dark moment for Ford," crisis-management expert Gerald Meyers said. "I'm sure they're considering thoughts that have never occurred to them before. I wouldn't be surprised if Ford did something radical."
Bill Ford has said bankruptcy is not an option, but Burnham Securities analyst David Healy says he thinks Ford is headed for a bankruptcy filing within five years. He predicts the company will burn up $7 billion this year and up to $9 billion next year. It has $23 billion cash, including its health care fund.
Meyers, CEO of struggling American Motors when Chrysler bought it in 1987, thinks Ford should go private: "The stock is cheap. It wouldn't take much to buy all the (shares the Ford family doesn't own). Then they could repair to their inner sanctum and work out their problems out of the glare of the press and the SEC," and without relentless demands for short-term profits from shareholders.
"Radical times call for radical solutions," Meyers says.
"I would never say never, but I think chances are pretty slim," because the family wouldn't want to come up with the money to buy all the shares, says John Murphy, auto industry analyst for Merrill Lynch.
It would cost about $13.3 billion to buy all 1.9 billion outstanding Ford shares at Wednesday's closing price of $6.96. That was up 38 cents on news of Leet's hiring.
Even though Wall Street cheered Ford's hiring of Leet, the move can be seen "as bordering on a desperate measure to restructure, and an acknowledgement that some of the previous restructurings haven't worked," says Bill Schwartz of TBM Consulting, which advises automakers and others on production and strategy.
Also Wednesday, Ford tried to blunt an unveiling of redesigned 2007 GM pickups by announcing price cuts of up to $1,400 on its F-150 pickup and a boost in towing capacity to as much as 10,500 pounds.
Ford's F-Series pickups remain the best-selling vehicles in America, but sales are collapsing — down 45.6% in July from a year earlier, according to Autodata, and off 12.3% the first seven months.
Year-ago sales were inflated by extraordinarily generous sales incentives. "But for whatever reason, if your F-150 sales are off 40%, that's a stark number, like losing a member of your family," Meyers notes.
GM's full-size pickup sales are sagging, too, in their last year before the redone 2007 models are launched this fall, but GM's haven't fallen as far as sales of Ford's newer-design F-Series.
The news flurry Wednesday comes after a shocking monthly sales report Tuesday. Toyota outsold Ford Motor last month, taking over the No. 2 spot in U.S. new vehicle sales. Toyota itself said that probably won't last, but it shows Ford's vulnerability.
GM, despite a sales slump, remains comfortably ahead of Ford and Toyota.
Ford, overall, is in worse shape than GM, says Global Insight's Magliano. Both have high labor and health care costs, and both are losing market share as consumers increasingly turn toward more fuel-efficient cars and trucks. But Ford's future product lineup looks less promising, he says.
The F-Series was the only Ford among the 10 best-sellers last month. GM had four vehicles in the top 10: Chevrolet and GMC full-size pickups and Chevy Impala and Cobalt sedans.
Says Merrill Lynch's Murphy: "Fundamentally, Ford is in pretty tough shape.
"I think everything is pretty much on the table at Ford right now."
). In my opinion Toyota is going to kill themselves, people put so much hype and the media props them up like a golden cow, I've seen it before, and it will happen they will fall, they've had 3 million recalls this year, BMW has only recalled like 50,000 cars this year? Don’t fall into publicity, you lose in the end.
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