The Pessimism About Ford Grows
Ford (F) took a nice bounce in April and came close to $8, but it is back a few cents from its 52-week low of $6.50.
Some of the company's news has been good. About 11,000 workers have agreed to take buy-outs. Ford plans to close at least 10 plants to further cut costs.
But, the company's North American market share is under siege. The most successful vehicle the company makes, its F-series pick-up, faces new competition from Toyota which is pushing its own pick-up line, the Tundra. According to forbes.com, Ford makes $8,000 on each of its trucks and it sold over 900,000 of the F-series last year. Any dent in this would do severe damage to the company's margins.
The Fitch credit agency recently downgraded Ford's debt rating based on the belief that the company's prospects of making money in North America are dim.
Ford's May vehicle sales were down 1.9%, but SUV sales were off 21% from a year ago, and F-series sales dropped 5.8%. Wall Street's concern is obvious. The brands with the highest margins are the ones with the most rapidly dropping sales.
With Ford's U.S. market share just above 17% and the prospects that it may fall further, investors are selling the stock down because they don't believe the company can cut enough costs in the near-term to keep up with dropping revenue.
Douglas A. McIntyre
Some of the company's news has been good. About 11,000 workers have agreed to take buy-outs. Ford plans to close at least 10 plants to further cut costs.
But, the company's North American market share is under siege. The most successful vehicle the company makes, its F-series pick-up, faces new competition from Toyota which is pushing its own pick-up line, the Tundra. According to forbes.com, Ford makes $8,000 on each of its trucks and it sold over 900,000 of the F-series last year. Any dent in this would do severe damage to the company's margins.
The Fitch credit agency recently downgraded Ford's debt rating based on the belief that the company's prospects of making money in North America are dim.
Ford's May vehicle sales were down 1.9%, but SUV sales were off 21% from a year ago, and F-series sales dropped 5.8%. Wall Street's concern is obvious. The brands with the highest margins are the ones with the most rapidly dropping sales.
With Ford's U.S. market share just above 17% and the prospects that it may fall further, investors are selling the stock down because they don't believe the company can cut enough costs in the near-term to keep up with dropping revenue.
Douglas A. McIntyre
posted by douglas mcintyre at 1:13 PM
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