US: Analysts lower earnings estimates for Ford

By just-auto.com editorial team | 1 December 2006

Financial analysts are cutting their earnings estimates for Ford Motor Company following news this week that 38,000 hourly workers have signed up for buyouts and that Ford will use up US$17bn in cash though to 2009.

The Detroit Free Press reports that Morgan Stanley now sees Ford losing US$1.75 a share, up from US$1.15 a share.

An analyst with Goldman Sachs, Robert Barry reportedly wrote in a research note to investors that his company is not convinced that Ford's current efforts are enough to return Ford to profitability in North America. Furthermore he says that Ford is testing shareholder patience.

"The fact that Ford's own public estimates suggest only minimal profitability out in 2009 ... does little to boost our confidence," wrote Barry.

Goldman Sachs lowered its estimate on Ford's earnings next year to a loss of US$1.35 a share, up from a prior estimated loss of 75 cents a share.

For 2008, Morgan Stanley is now estimating Ford's losses at 60 cents a share, compared with an expected loss of 10 cents a share previously. Goldman Sachs predicts Ford will lose 75 cents instead of the previously predicted 50 cents.

Speaking earlier this week, Ford's CFO, Don Leclair, would not specify the amount of profit expected in the North American business in 2009. One analyst questioning Leclair on the call described the bar representing 2009 results as just a "thin sliver of profits."

Ford's North American business reported a loss of US$3.3bn before taxes and special charges through the first nine months of 2006.

Ford also said earlier this week that it plans to obtain financing totalling about US$18bn by the end of 2006 in order to fund its restructuring and provide a cushion against a possible recession. Ford said the financing would take the form of a new five-year, US$8bn revolving credit facility, a senior secured term loan of about US$7bn and US$3bn in transactions that could include unsecured notes that would be convertible into Ford common stock.