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Good News Could be Bad News for Ford

Workers reject concessions; exec pay, profits spur backlash.

by on Nov.02, 2009

Ford CEO Alan Mulally will likely have some good news to announce in regards to Q3 earnings, today, but the news will be undercut by word the UAW has rejected a package of proposed concessions.

CEO Alan Mulally will likely good news on Q3 earnings, today, but it will be undercut by the UAW's rejection of proposed concessions.

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.

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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.

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