Blog: Ford piles on the red ink
Dave Leggett | 24 July 2008
If 'firms in the motor industry are good at losing money, but not good at going bankrupt' as an equities analyst has just said, then maybe Ford can go to the top of the class after it's latest results. Whatever the reasons for the 'special items', the bottom line does look a little gruesome. As pessimism mounts over general market prospects for North America in 2009, a restructuring Ford and GM are acutely aware of the need to be credibly seen to have sufficient liquidity to ride out the hard times ahead and keep the Chapter 11 chatter down. Fine, and maybe Ford is keen to get the bad news behind it with some of these write downs.
But what if 2010 shapes up as a stinker, too? What's next to be cut and at what point are the cost cuts either building a scary looking deferred backlog of spending that will have to hit sometime or starting to impact the patient's vital organs and long-term health rather than simply peripherals/redundant parts and the need for less internal working capital on lower production?
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