With one of the worst recessions slowly dragging to a close and auto sales just beginning to show some vague signs of life after the more severe downturn in decades, one might think the likelihood of a good third-quarter earnings report by Ford Motor Co. would be something to cheer about.
Not necessarily. Ironically, it could make it even harder for Ford to compete in the long-run.
Though the automaker has so far posted profits of $834 million for the first six months of 2009 – a sharp turnaround from the $29.8 billion it lost between 2006 and 2008 – this year’s black ink was largely due to debt reduction and one-time charges and, and not a true profit from operations. But the third quarter, according to analysts’ estimates, is expected to bring black ink from what Ford is supposed to do best: build and sell automobiles.
The forecasts variety widely. One survey, by Thompson Reuters, predicts a relatively modest loss of 13 cents, barely 10% of the $1.31 loss during the third quarter last year. But J.P. Morgan analyst Himanshu Patel is more bullish, forecasting a 16 cent profit per share.