Ford’s Worst Quarter Ever
July 26th, 2008Via: Business Week:
Ford Motor reported a second-quarter loss of $8.7 billion, its worst single quarter in history.
Much of the loss was due to a writedown in the value of assets, and losses on falling values of SUVs coming off leases back to the automaker’s Ford Motor Credit arm. But, like a kid who wrecks the family car and tries to distract his parents from the bad news by offering to paint the house, Ford unveiled a plan to make over its lineup with more small, fuel-efficient vehicles in the next two-and-a-half years—faster than Wall Street had expected.
Ford’s plan to achieve a net profit in 2009 after losing $15.3 billion the past two years had already been thrown off track by the worse-than-expected housing meltdown and high gas prices. But the huge second-quarter loss was a setback Chief Executive Alan Mulally did not anticipate until a few months ago when SUVs like the Ford Explorer, Ford Expedition, and Lincoln Navigator started losing thousands of dollars in value in a matter of weeks at auctions where off-lease vehicles are sold. Skyrocketing gas prices have cratered demand for such vehicles.
Ford shares were trading down 9.5%, at 5.46, in midday trading on the New York Stock Exchange.
