Ford Shares Hit on Warning

Updated from 8:39 a.m. EDT

A slew of analyst downgrades battered Ford(F) Monday after the automaker cuts its 2005 profit guidance, citing ballooning expenses and a tough market for cars and trucks. The company also announced its top U.S. sales executive has resigned.

Among other actions, Ford had its price target cut to $9 from $15 and its 2005 earnings estimate lowered to $1.25 from $1.75 at CSFB. Ford shares closed at $10.44, down 59 cents, or 5.35%.

Later Monday, Ford announced that its top U.S. sales executive, Earl Hesterberg, had resigned.

Steve Lyons, previously the company's vice president and president, Ford Division, will become group vice president, North America marketing, sales and service.

"Steve Lyons' strong sense of the marketplace, relationships with dealers and ability to drive results will help us grow market share with our two highest-volume divisions," said Greg Smith, executive vice president, in a statement.

Ford said Friday that it expects to earn $1.25 to $1.50 a share in 2005, excluding charges. It had previously forecast earnings of $1.75 to $1.95 a share for the year. The company said automotive pretax profits will have to struggle to break even in 2005, although it still expects automotive operating cash flow to be positive.

Ford said earnings in its first quarter will actually top its previous guidance of 25 cents to 35 cents a share, but that "difficult business conditions in the automotive sector for the remainder of the year have affected the company's full-year outlook."

Excluding the charges, analysts surveyed by Thomson First Call expected Ford to earn 36 cents a share in the first quarter and $1.64 a share in the full year.

Ford will also fail to reach its goal of generating $7 billion in pretax profit before items in 2006.

In March, Ford said high steel and oil prices, rising health care costs and the weak dollar would leave full-year earnings toward the low end of its $1.75 to $1.95 a share range.

"The company's analysis of recent market trends, which include the prospect of higher and sustained gasoline prices and continued aggressive pricing actions by competitors, have led us to conclude that further challenges lie ahead," Ford said. "Accordingly, we have revised our earnings outlook for the full year."