Updated from 11:49 a.m. EDT
Time is not on
That was the message from CEO William Ford on Thursday as the automaker reported that it swung to a second-quarter loss as its market share continued to ebb.
He said "external factors" in the auto industry require Ford to accelerate, and possibly overhaul, its turnaround plan, known as "Way Forward." He also hinted the company is interested in a partnership like the global triumvirate that is being explored between
"We're always talking to everybody in the industry as we always have," said Ford when asked on a conference call if his company needed new partners. "Our first priority is fixing our business."
He noted that Ford already has global scale and it has partnered with other automakers around the world.
" We've done partnerships and done very well at them," Ford said, citing the company's alliance with
as an example.
GM CEO Richard Wagoner has been in talks with Carlos Ghosn, the CEO of Nissan and Renault, about joining forces in a deal that could transform the global auto industry and pressure
as the Japanese giant angles towards overtaking GM as the world's largest automaker. GM's most prominent activist shareholder, Kirk Kerkorian, has publicly endorsed the idea, while GM continues to struggle under its cost burdens and competitive pressure.
For Ford's part, the nation's second-largest automaker reported a loss of $123 million, or 7 cents a share, for the quarter. That compares to earnings of $946 million, or 47 cents a share, in the same quarter last year. Adjusted for items including a charge related to job cuts, Ford recorded a loss from continuing operations of $48 million, or 3 cents a share.
The results badly missed analysts' forecast calling for a profit of 12 cents a share, based on a Thomson First Call average analyst estimate. Ford's shares recently were down 5 cents to $6.28.
Second-quarter sales fell 2% from a year ago to $37.75 billion, missing estimates by almost $2 billion.
"Ford has pledged to try to slow the decline in their market share this year, but they really have no new products coming up with which to do that," says Burnham Securities analyst David Healy. "They have to use pricing, so their numbers will continue to deteriorate without speeding up cost cutting."
Ford's worldwide automotive operations lost $808 million on a pretax basis in the second quarter, compared with a loss of $245 million a year ago. In North America, the pretax loss was $797 million, compared with $907 million a year ago. North American sales dropped to $19.2 billion from $19.9 million.
The narrowing of the North American loss "is more than explained by cost reductions in most areas of the business, partially offset by a mix shift from trucks to passenger cars, higher incentives and adverse foreign currency exchange," Ford said.
"We've seen an improvement in North America results in the second quarter, but the external factors we face aren't going to get any easier," the company said
By "external factors," Ford was referring to macroeconomic forces like high oil and gas prices that are weighing on consumers and causing them to eschew Ford's vehicles in favor of the smaller, more fuel-efficient cars made by its competitors.
GM faces similar problems, but while its shares have led the Dow Jones Industrial Average, Ford's are down 26% so far in 2006. In addition to the prospective partnership, GM shares have gained momentum due to employee buyout offerings that will pare down costs.
"The problem is that Bill Ford didn't want to cut all the people he needs to cut all at once," says Healy. "It's heartbreaking for him, and he's been trying to let his workers down gently. Also, I don't think Ford ever anticipated the competitive bloodbath that's been going on in this industry this summer."
Bill Ford said in the conference call Thursday that the company is picking up the pace of its cost-cutting plan. The company said "additional actions" will be outlined to accelerate the improvement within the next 60 days.
By the end of the year, Ford said, the company would be about a third of the way toward its goal of closing 14 plants and cutting 25,000 to 30,000 jobs by 2012. Last week, the company announced that it would cut its dividend in half, as well as lower its compensation to board members.
"We're looking at everything and all aspects of our business," he said. "In a couple of months, we will have for you an updated version of our Way Forward Plan."