Business & Technology Nexus

Dave Stephens on technology and business trends

Ford Loses Over 5B in Single Quarter

with 4 comments

Here’s a review of Ford’s latest quarter. And it’s not pretty. I thought I’d offer the perfect audio complement: a snippet of Rudy Vallee’s 1932 recording of “Brother Can You Spare A Dime.”

Now their new CEO has called on accelerating the move to smaller, more fuel efficient cars. But that misses the point. Slow 2nd movers in a commoditized market get crunched. Ford will move to smaller vehicles while the leaders take it to a new level. And Ford, I’m afraid, may be no more.

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Written by Dave Stephens

10/23/06 8:04 AM at 8:04 am

Posted in Opinion

4 Responses

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  1. Hi Dave,

    Not sure we will be rid of Ford any time soon.

    While I’m not a huge fan of Ford products, you can’t always trust the media when assessing bankruptcy risk. Much of the reported losses at Ford are due to restructuring costs. Bankruptcy would be a greater risk if management was doing nothing to reduce costs, but that is not the case.

    Check how the media tried to convince us that GM was going bankrupt earlier this year and now “the experts” have become silent without admitting they were wrong. Ford should not file bankruptcy any time soon, unless they use the courts to fight the unions like the airlines do every year or two.

    The facts on Ford:

    Cash of over $20 billion
    Borrowed debt of $150 billion
    Assets in profitable finance captive $140 billion

    If they want to deleverage, they could sell the captive finance company assets (take them off balance sheet) and significantly reduce their debt. GM will be taking their captive off balance sheet in the next quarter or two, and it should completely silence the bankruptcy issue. GM has moved toward breakeven operating profits due to restructuring efforts, and we can expect Ford to do the same.

    While I don’t own their cars, I understand they have been an early mover into the China market and are well-positioned there.

    Ron the Analyst

    10/30/06 10:04 PM at 10:04 pm

  2. that’s good to hear. they’ve certainly lost my business however (i own an F-150 Supercrew). i just see a tidal wave of market share gains for Toyota until Ford figures out how to innovate again. and per my previous posts i don’t mean more cup holders.

    i believe them that they are going to shrink the business and go to smaller volumes to try and resurrect the business that way. but it’s not just about being small. they need to figure out how to have better designs (1st step – get suppliers to like them) and then better manufacturing processes, including 0 downtime configuration change support.

    now there’s a lot of great people that work at ford, so nothing is impossible and i wish them the best of luck.

    Dave Stephens

    10/30/06 11:35 PM at 11:35 pm

  3. Sure companies like Ford who sunk millions of dollars in useless products/technologies from companies like Oracle deserve it and you should be proud!!

    BuFord

    11/1/06 5:51 PM at 5:51 pm

  4. Useless?! Come on! I suspect the Oracle product set has more than proven its value over the years.. But of course that’s for others to judge.. I’ve already said a bunch about the eVEREST project, the specific piece of work I came to be involved in at Ford, but I’d just recommend those who are interested go back to my prior posts for that info.

    Dave Stephens

    11/1/06 6:27 PM at 6:27 pm


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