Ford MI news bit about Ford Motor Company’s announcement about first quarter gains led to initial share increases, but stocks continue to slip despite profit report.
DEARBORN, M.I. – Ford MI followers now know that Ford Motor Company reported Monday, April 26, a first quarter net income of $2.1 billion, or 50 cents a share, amounting to a $3.5 billion gain from first quarter 2009. The news initially resonated well through Wall Street as shares hit a new 5 year high (closing at $14.46), but prices dropped 6 percent Tuesday, and continue to fall, down to almost 3 percent, as of 2 p.m. EST Wednesday.
Ford President and CEO Alan Mulally said in a press release, “We remain cautiously optimistic about positive signs emerging in the global economy, while knowing that the recovery is fragile and the global auto industry continues to deal with excess capacity. For us, the most important thing we can do is to stay focused and continue to make progress on our plan.”
There will be many roadblocks Ford must surpass if it is to continue turning over profits at its current pace, something many analysts doubt Ford can sustain.
According to StreetInsider.com, Credit Suisse downgraded Ford from Neutral to Underperform.
Additional bad omens are on their way for this Ford MI company that refused a government bailout, and they include: rising costs for steel and other raw materials; depleting credit revenues because fewer cars sold during the recession mean fewer payments collected; and new product launches will necessitate an increase in Ford’s spending.
A continued profit streak could also spell trouble as workers once forced to give up benefits could seek to regain them if the company continues to make gains.
Yet a bit of good news comes to Ford as The Federal Reserve wrapped up a two-day meeting on Wednesday, and stated it would continue to hold rates at near zero for an “extended period” of time due to the looming effects of the recession. But the automotive giant is still accruing debt, another $700 million to make the quarter’s total a staggering $34.3 billion.
Ford also announced a plan to build a total of 625,000 more cars and trucks during the period running April through June, but the increase in plant production doesn’t necessarily translate into newly hired Ford MI workers or call backs for laid-off employees.
In a statement made to the Detroit Free Press, Chief Financial Officer Lewis Booth said he didn’t want to offer any “false hopes,” adding, “We are not in a position to start hiring yet. If we continue to grow, maybe we'll talk about that sometime later.”
There are some bright spots on Ford’s radar such as being rated to have the highest customer satisfaction rating by RDA Group of Bloomfield Hills, Mich.; top listing and accolades for the Ford Fusion; and the popularity of its Fiesta subcompact.
But when those successes are matched with the all the adversity Ford will face in the next coming months, it’s doubtful Ford can sustain its impressive first-quarter-generated profit pace for long.
[Source(s): Associated Press, The Detroit Free Press, StreetInsider.com]
|