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Thursday, July 20, 2006

Widely Traded 48 Hour Clock: Ford's Not So Bad Results

Stocks: (F)

Given the shift away from the purchase of trucks and SUVs due to higher gas prices, Ford's results for its second quarter were surprisingly good. If the company continues to reduce costs, Ford may even make an escape from the jaws of bankruptcy.

Excluding restructuring costs, the auto giant lost $.03 a share compared to a profit of $.47 in the period a year ago. Revenue for the quarter dropped $2.5 billion to $42 billion.

The company's cash and equivalents were about the same as at the end of Q1, $23.7 billion, which is a fairly good sign that the company is not burning through money. Worldwide units sales of Ford vehicles actually rose slightly to 1,732,000. Obviously, the mix was less profitable as people moved from SUVs and trucks to cars.

Ford showed it could make money, at least in Europe. Profits there hit $105 million up from $66 million in the quarter a year ago. Cost reductions drove much of the bump up.

The company also announced that Q3 vehicle production in the US should be 670,000 units, down 58,000 units from last year.

Ford's expense reduction compared to a year ago was fairly impressive falling from $44.5 billion to $42.8 billion.

Now, if the company can stabilize its share in North America, the old girl might start to look fairly good again.

At $6.33, down from nearly $15 in the beginning of 2005, Ford looks attractive, but still risky.

Douglas A. McIntyre can be reached at He does not own securities in companies he writes about.

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