Ford to Report Billion Dollar Profit in 3rd Quarter

[Lowell]

Isn't it nice to finally hear some good Detroit automotive news for a change.

No we're not out of the woods, neither is Ford, but it is nice to be able to see out if for a change.

[artds]

Good news, even if it was due in large part to the temporary cash for clunkers program.

I just hope the UAW doesn't get all pissy over this and try to take a bite out of it right away. Ford lost tens of billions of dollars in last several years, and all the debt that the company racked up during that time needs to get paid down before Ford can become a healthy company again.

[Sstashmoo]

Now how much Mullaly worth?

[artds]

Now how much Mullaly worth?

He's worth whatever the company's shareholders say he's worth. And if you're a Ford shareholder, you've got to feel pretty good about what he's managed to do in such a tough economic environment, especially considering the shape that the company was in when he arrived in Dearborn.

[smogboy]

Bravo to Ford for having some good news! It's about time we heard some good news about the auto industry.

[Retroit]

These financial statements are so confusing, I believe they could say whatever you want them to say.

For example:
"[In the third quarter, Ford:] -- Received $886 million in loans from the U.S. Department of Energy for development of more fuel-efficient vehicles. Ford has been approved for up to $5.9 billion in loans in support of projected expenditures through mid-2012
-- Raised $565 million in new equity as Ford completed its previously-announced plan to issue up to $1 billion of equity"

Well, there's your billion dollars right there. Didn't have anything to do with selling cars, but....

[[source: http://www.foxbusiness.com/story/mar...north-america/ )

[Lowell]

They would have had that ^ anyway. That has nothing to do with profit-loss calculation, other than service on debt. And it does have everything to do with selling cars. Their domestic share is growing, their costs are dropping.

As for the above dig at the UAW, union concessions have been immense and are part of the success blip. If Ford wants to do anything with that surplus, they should plow that profit back into R&D so they can build momentum and long term stability.

[artds]

These financial statements are so confusing, I believe they could say whatever you want them to say.

For example:
"[In the third quarter, Ford:] -- Received $886 million in loans from the U.S. Department of Energy for development of more fuel-efficient vehicles. Ford has been approved for up to $5.9 billion in loans in support of projected expenditures through mid-2012
-- Raised $565 million in new equity as Ford completed its previously-announced plan to issue up to $1 billion of equity"

Well, there's your billion dollars right there. Didn't have anything to do with selling cars, but....

[[source: http://www.foxbusiness.com/story/mar...north-america/ )

That's not how that works.

When you borrow money, you don't end up with a net gain to report, since they money you receive from the lender is offset by an obligation to repay the money. The same thing is true when you issue stock [[i.e., equity) in your company and receive cash in exchange from the purchasers of that equity.

On a balance sheet, your asset column will increase by the amount you receive from the lenders and the amount you receive from stock holders who purchase equity in your company, but the liabilities column increases by an equivalent amount.

Any amount you end up with from your operations that exceeds your current liabilities is profit [[which is what Ford reported), and that can either be reinvested into the company or paid out to the stockholders as a dividend.

As far as "loans in support of expected expenditures", all that means is that Ford was approved for a line of credit. It's like Visa approving you for a credit card with a $5.9 billion limit. But until they actually tap that line of credit [[which Ford hasn't yet), it doesn't even go on the balance sheet, and even then, it would be offset by an obligation on Ford's part to repay the money that Ford was advanced by its creditors.

So, yes, their profit had a lot to do with selling cars AND cutting costs. The bigger concern, however, is that a large portion of their sales were subsidized by the government's cash for clunkers program, which has been discontinued.

[daddeeo]

No wonder the union voted down more concessions. They smelled a rat when they were pressed to ratify it before the earnings came out.

[Det_ard]

As for the above dig at the UAW, union concessions have been immense and are part of the success blip. If Ford wants to do anything with that surplus, they should plow that profit back into R&D so they can build momentum and long term stability.

They're already putting around $5 billion/year into capital expenditures which should be ample [[includes what you call R&D, and other things related to product development and tooling for new models). They have to get the debt paid down as well, that's a good use for excess cash.

Unfortunately for the UAW they'll need to give back more. GM and Chrysler already have labor costs/rules that are competitive with the transplants. Ford is now the high-cost producer. They're doing OK now, but in the long run they can't succeed if everyone else has a cost advantage over them.

[English]

I'm proud of Ford. I hope they continue to innovate and become a smarter and more sustainable corporation.

[artds]

No wonder the union voted down more concessions. They smelled a rat when they were pressed to ratify it before the earnings came out.

Ford was right to ask them to vote on concessions before the earnings came out, since earnings report like the one they just released have a tendency to cause people to make the mistake of assuming Ford is much healthier than it really is, which is exactly what you just did.

The positive quarter was largely the result of the cash for clunkers program subsidizing US auto sales with taxpayer dollars. With that program now discontinued, Ford is likely going to going to report a loss in Q4, and that probably won't be the last one they will have before they sustain long-term profitability.

Ford is saddled with far more debt than any of its competitors, especially GM and Chrysler, which just had most of their debt wiped away through their bankruptcy filings. The worst thing that could happen now is for the workers to make the same mistake you did and start demanding wage increases or refuse to accept concessions that put them in parity with GM and Chrysler workers just as Ford is beginning to claw its way out of this hole.

[Detroitnerd]

Oh, yes. It's all the workers' fault.



UAW Members Vote Down Ford and the Media Attacks the Union



Even people who genuinely admire the United States say they are astonished by our sense of exceptionalism — our rock-ribbed belief that we, above all others, deserve to be fulfilled. Arguably, no citizens on earth have a greater sense of entitlement and special privilege than Americans, as evidenced not only by our personal conduct, but by our military adventurism, cultural hegemony, and corporate welfare.


...

Confoundingly, America’s sense of economic entitlement doesn’t extend to working people. It applies to the rich, to the well-connected, to the military-industrial complex, to farmers and ranchers and corporations, to every manner of businessman, consultant, hustler, advertiser, and entrepreneur—but not to the people doing the actual work, putting their shoulders to the wheel, keeping the country going.



Take the ... recent [[last week) vote by UAW members employed by the Ford Motor Company. The vote was an eye-opener, a shocker. Despite UAW president Ron Gettelfinger’s plea for ratification, the offer was voted down by so many union locals, the UAW executive board, seeing the writing on the wall, was forced to admit defeat even before all the votes were in.


http://www.counterpunch.com/macaray11022009.html

[PeachLaser]

My hat is off to Ford. They took on themselves to reinvent their fleet [[IMO) and make it more efficient, more modern in styling and lessened their dependence on SUVs. That's the kind of smarts that helped them make $1 billion in profit. The cost concessions were part of it too, but I agree, that this is just the first step. Go Ford!

[Sstashmoo]

Union worker: "You made a profit? I want it"

[Detroitnerd]

Management boss: "You made me a profit. I took it."

[artds]

Shareholder: "Screw you both. That's MY money!"

[Detroitnerd]

Haha. Thanks for injecting a little much-needed levity, artds.

This debate reminds me of an old cartoon from the 1930s. Pokey little train chugging away but can't make much headway, because it is pulling three capitalists, each two stories high, in top hats and all. Dissatisfied with the slow progress, one of them points at the workers and cries, "There's the problem!"

[Ltdave]

im glad Ford is doing well even if i work for one of the other 2 detroit based makers...

HOWEVER, how much of the $40,000 sticker price on a 2010 mustang GT convertible is 'profit' and how much of it is the actual cost of building the car? jeez, id LOVE one of those [[i had an 88 GT coupe and loved it for 165,000 miles) but for cryin out loud, whos got that kind of money?

i like their Super Duty with the diesel but its as pricey as our trucks without the benefit of getting a Cummins. the chassis and trans is better than ours so maybe that levels the playing field?

again, Congrats to FORD...

[Bcscott]

Good news, I've got three Fords in my stable including an 09 F150. Fantastic truck!

[Switchmanjim]

The products Ford will be comming out with in the next few years will knock your socks off...

[Hypestyles]

bully for alan Mulally & whoever else in the Ford hierarchy.. not that it's going to really help out most other folks in michigan..

[DetroitHabitater]

switchmanjim, do you also work for the FoMoCo?

[East Detroit]

not that it's going to really help out most other folks in michigan..

Nonsense.

You think the McDonalds on Gratiot in Roseville is unaffected by the Detroit 3?

[313WX]

Nonsense.

You think the McDonalds on Gratiot in Roseville is unaffected by the Detroit 3?

Directly, yes.

You're dealing with an entirely new scenario when discussing a suburban McDonalds on Gratiot.