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The only U.S. automaker to avoid bankruptcy posts an unexpected profit thanks to a big lift from Cash for Clunkers sales.
NEW YORK (CNNMoney.com) -- Ford Motor reported a surprise profit for the third quarter Monday, helped by a bump in sales from the Cash for Clunkers program, a reduced cost structure and problems at its U.S. rivals.
I missed out on Cash for Clunkers but I just bought a new Fusion. Ford has really stepped up their quality and its paying off for them. I still think they'd be better off dropping the Mercury marque.
One problem...Ford's debt went up by $800 million to $26.9 billion, revenue dropped by $800 million and this "profit" was all about lower operating expenses--$1 billion less of that.
So, before anyone runs out for Ford stock, no, don't jump in head first just yet...Cash 4 Clunkers won't be around this next quarter.
Ford surprises with $1B profit; sees profit in '11 - Yahoo! Finance (http://finance.yahoo.com/news/Ford-reports-1-billion-3Q-apf-3471782507.html?x=0&sec=topStories&pos=main&asset= &ccode= - broken link)
And they're already having trouble with the UAW over this "profit".
Ford didn't get the labor concessions that GM and Chysler got with their bankruptcies...so now they are at a competitive disadvantage with them, never mind the non-union import brands.
And they took on enormous debt in '06 to stay afloat....and they've mostly burned through that. I wouldn't break out the party favors for Ford just yet.
I think they should have gone bankrupt with the other two and chucked their debt and gotten major labor concessions...
One problem...Ford's debt went up by $800 million to $26.9 billion, revenue dropped by $800 million and this "profit" was all about lower operating expenses--$1 billion less of that.
So, before anyone runs out for Ford stock, no, don't jump in head first just yet...Cash 4 Clunkers won't be around this next quarter.
Ford surprises with $1B profit; sees profit in '11 - Yahoo! Finance (http://finance.yahoo.com/news/Ford-reports-1-billion-3Q-apf-3471782507.html?x=0&sec=topStories&pos=main&asset= &ccode= - broken link)
That is exactly what well managed companies do - they take decisive action regarding lowering operating costs in bad economic times. These costs are something that the company can do something about. This puts such a company in a great position when revenues increase. By altering the break even structure, both with variable and fixed costs, and unconstrained by government intervention, Ford should be well positioned to post outstanding net income numbers in the near future.
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