Perhaps the biggest question raised at the
annual meeting Thursday involves the future of CEO Alan Mulally, who will turn 65 on Aug. 4.
Responding to a shareholder, Chairman Bill Ford said the company's retirement policy is flexible. "Alan has been completely superb for this company," he said. "We'd like him to stay as long as he wants."
Ford Motor Co. CEO Alan Mulally, left, and Chairman Bill Ford, right, laugh during a news conference after Ford's annual shareholders meeting, Thursday, May 13, 2010, in Wilmington, Del
Earlier, as he introduced Mulally, Ford thanked Mulally for his work and noted: "The best part is that he's just getting started," perhaps an indication that succession questions can be put aside for a while. Mulally retains a healthy appearance and, from all indications, seems happy as an industrial icon.
"Sixty-five is not as old as it used to be," said Standard & Poor's analyst Efraim Levy. "Alan has a lot more mileage left.
"I don't expect him to leave imminently," Levy said. "At some point they should appoint a successor-designate. But a lot of the changes he made in the way the company operates should outlast him. There was a change to the culture and a change to the processes. Ford's on the right track and it will have to stay on that track."
Since arriving in Detroit in 2006, Mulally has become the symbol of Ford's resurgence, credited with a change in course that Bill Ford described Thursday as "one of the greatest financial turnarounds in our 106-year history."
By now, the story is well known. Mulally mortgaged everything, borrowing $24 billion, in a move that was questioned until, three years later, Ford was the only one of the Detroit Three to avoid bankruptcy, which -- along with a new product line -- enabled it to gain widespread consumer support.
After losing $14.8 billion in 2008, the automaker made $2.7 billion in 2009 and $2 billion in the first quarter of 2010. It now says it will be profitable in the current year as well as 2011. Market share has improved from 15.5% in 2007 to 16.8% so far in 2010, the highest level since 17.3% in 2006, according to Edmunds.com
Ford stock, of course, has reflected the improvement, soaring 1,200% in 19 months, from a low point of $1.01 in November 2008. Shares rose 335% in 2009. They began 2010 at $10.17 and climbed to $14.57 on April 26. Then, a selloff following the April 27 earnings report took the pricd down to $10.59 on May 6. In early afternoon trading Thursday, shares were down 7 cents to $12.61.
Several analysts now have a hold on the shares.
In a report issued Tuesday, KeyBanc analyst Brett Hoselton raised his full-year estimate for the automaker to $1.27 from 97 cents. Analysts surveyed by Thomson Reuters are estimating $1.28. "Driven in part by increasing market share, higher transaction prices and a lower cost structure, Ford is well-positioned to benefit from a potential multi-year recovery in Ford is well-positioned to benefit from a potential multi-year recovery in U.S. light vehicle sales," Hoselton wrote.
However, he retaind a hold rating on the stock because "much of the expected improvement going forward may already be reflected in the stock price."
In a May 3 report, Levy reiterated a hold, saying the 25% increase in vehicle shipments in April was positive, but not as positive as the 43% gain in March. Mix improvement, an increase in residual values and a recovery economy are all positives, Levy said, but "we think some monthly comparisons will become more difficult. "
Deutsche Bank analyst Rod Lache also has a hold on Ford. He wrote on April 27 that Ford's strong first-quarter results justify a price target of $13.60. "An upside case for Ford's shares would require significantly higher margins" than is typical for a mass market automaker, Lache said, but those margins may be attainable.
Merrill Lynch analyst John Murphy has a buy on the shares, based on his full-year earnings estimate of $1.45 a share and a price target of $17.50. "We are encouraged by Ford's restructuring progress (and) continued execution, and believe the company is at a positive inflection point," he wrote.
-- Written by Ted Reed in Charlotte, N.C.