Ford Takes a U-Turn Into Trouble
When Ford (F) - Get Report reported earnings last month, I bemoaned the fact that the business media that only one publication -- The New York Times -- went and called the numbers what they rightly were: astonishing.
Astonishingly good, that is: They were far better than expected. The beleaguered carmaker reported 20 cents a share in profit when a loss of 16 cents was expected. The rest of the business media world, like the robots they too often are, wrote about the earnings as if Ford had beaten by a penny. Alan Mulally, Ford's CEO, was soon on the line to The Business Press Maven, emailing to let me know how much he dug the article. But something else happened with Ford yesterday, and the word "astonishing" should have been used again. This time, though, I'm not sure Mulally will be writing a love letter. Oh well -- easy come, easy go.
Here's what happened -- we'll work our way down to the astonishing part. Ford announced late last week that its heralded return to profitability in 2009 won't happen. The company will break even instead, and on the surface, there is no shame here. Ford is cutting costs with near-unrivaled skill, and its new cars are getting good notice. Many companies have been hurt by rising oil prices, and there is no reason that Ford should not also suffer, to a degree.
Reuters, though, went and did what should always be done when benchmark numbers are lowered. They wrote a story about when the decision was made and how the lowering came about. Mullaly said, somewhat astonishingly, that he began looking at the issue after April's first-quarter announcement and "in the last couple of days it was clear to us that it was time to assume that going forward we had a more permanent shift, a structural change," he said, meaning from trucks and SUVs to smaller, economical cars.
, but I will: astonishing.
The American auto companies, formerly known as The Big Three, have seen themselves reduced in stature, because of lack of foresight and foot-dragging, stubborn unwillingness to change. (See:
GM
(GM) - Get Report
. Don't see:
Toyota
(TM) - Get Report
and
Honda
(HMC) - Get Report
.)
Oil has been going up for a long time now and environmental concerns are deep within the consciousness of the public. Yet it took until the last few days for Ford to realize that their product mix -- centered around cars the size of Bolivia -- is not the optimal way to turn a profit next year?
This shows you what Ford is up against in terms of cultural rigidity. It might fritter away the good that is coming from the cost-cutting and the small but promising batch of well-received new cars.
So for the second time in a month, the operative word for Ford is: astonishing.
Now let's head into the weekend with this gem. The Business Press Maven usually strives to find larger meaning in the foibles of the business media, so that you, the savvy investor, can take advantage of the spread between perception and reality. A well-known short-seller took his company public. When it did not perform well ... he blamed short-sellers. Ahh, sweet irony. Here the headline and lead:
Eric Sprott: Short sellers tarnished my IPO
.
Star hedge fund manager Eric Sprott admits he was taken aback by his company's less than stellar stock market debut Thursday, and figures short sellers were behind the massive trading volume. "I have to believe or think or conclude that there must have been some significant short selling," Mr. Sprott, the founder, chairman, chief executive officer and controlling shareholder of Sprott Inc. SII-T, himself a short-seller of no mean repute, said Friday.
And as we embark on Memorial Day, to those who have served this nation and died and those with family who have served and died, my thoughts, prayers and heartfelt thanks go to you.
At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.
Marek Fuchs was a stockbroker for Shearson Lehman Brothers and a money manager before becoming a journalist who wrote The New York Times' "County Lines" column for six years. He also did back-up beat coverage of The New York Knicks for the paper's Sports section for two seasons and covered other professional and collegiate sports. He has contributed frequently to many of the Times' other sections, including National, Metro, Escapes, Style, Real Estate, Arts & Leisure, Travel, Money & Business, Circuits and the Op-Ed Page. For his "Business Press Maven? column on how business and finance are covered by the media, Fuchs was named best business journalist critic in the nation by the Talking Biz website at The University of North Carolina School of Journalism and Mass Communication. Fuchs is a frequent speaker on the business media, in venues ranging from National Public Radio to the annual conference of the Society of American Business Editors and Writers. Fuchs appreciates your feedback;
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