Is There A Ford In Ford's Future F, GM, DCX
Now that Ford's (NYSE:F) chief operating officer, Jim Padilla, has announced his retirement at 40 years at the company, and is heading out the door, the question is whether Bill Ford will be next. He should be.
According to the Associated Press, a JPMorgan survey of the credit markets now puts the chances of a Ford bankruptcy at 43%. Call it Las Vegas for investment bankers.
The structure that gives the Ford family a super-majority of voting shares and effective control of the company remains in place, which means that shareholders and the board have little say in what happens to the company.
The company still plans to cut 30,000 jobs, but if Ford's market share, especially in North America, continues to shrink, it may not be nearly enough. The labor problems that the company shares with GM (NYSE;GM) and DaimlerChryler (NYSE:DCX) are not going away. Chrysler recently added dealer incentives to reduce inventory, and Ford and GM may be forced to match them to keep share.
Ford's truck sales fell 14.5% in April, which is tough, since this is where the company makes most of its money. Explorer sales were down 42%, and the company's flagship, the F-series truck had a drop of 9%. Gas prices, which tend to cut into truck and SUV sales, are now the enemy along with the UAW.
The Ford "Way Forward", the company's initiative to get its North American operations back profitability is now just a bad joke. While it may reduce costs, it is not producing products that the buying public wants. Witness Ford's Q1 06 revenue drop of $4.1 billion to $41.1 billion. North American revenue dropped 6% from a year earlier.
The stock has dropped from over $16 in mid-2004 to under $7.
Ford's demise may not be a foregone conclusion, but it is unlikely that Wall Street will bet on it with Bill Ford at the wheel.
Douglas A. McIntyre
According to the Associated Press, a JPMorgan survey of the credit markets now puts the chances of a Ford bankruptcy at 43%. Call it Las Vegas for investment bankers.
The structure that gives the Ford family a super-majority of voting shares and effective control of the company remains in place, which means that shareholders and the board have little say in what happens to the company.
The company still plans to cut 30,000 jobs, but if Ford's market share, especially in North America, continues to shrink, it may not be nearly enough. The labor problems that the company shares with GM (NYSE;GM) and DaimlerChryler (NYSE:DCX) are not going away. Chrysler recently added dealer incentives to reduce inventory, and Ford and GM may be forced to match them to keep share.
Ford's truck sales fell 14.5% in April, which is tough, since this is where the company makes most of its money. Explorer sales were down 42%, and the company's flagship, the F-series truck had a drop of 9%. Gas prices, which tend to cut into truck and SUV sales, are now the enemy along with the UAW.
The Ford "Way Forward", the company's initiative to get its North American operations back profitability is now just a bad joke. While it may reduce costs, it is not producing products that the buying public wants. Witness Ford's Q1 06 revenue drop of $4.1 billion to $41.1 billion. North American revenue dropped 6% from a year earlier.
The stock has dropped from over $16 in mid-2004 to under $7.
Ford's demise may not be a foregone conclusion, but it is unlikely that Wall Street will bet on it with Bill Ford at the wheel.
Douglas A. McIntyre
posted by douglas mcintyre at 11:37 AM
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