Ford ( F) posted a $12.7 billion loss for 2006 and warned that it "expects market share and most earnings comparisons to remain challenging for the next two to three quarters."

The Dearborn, Mich., automaker lost $5.8 billion, or $3.05 a share, for the fourth quarter ended Dec. 31. That compares with a year-ago loss of $74 million, or 4 cents a share.

Excluding special items tied to a sweeping restructuring, Ford lost $2.1 billion, or $1.10 a share, for the quarter, reversing the year-ago profit of $285 million, or 15 cents a share. Sales fell to $40.3 billion from $46.3 billion a year earlier.

Analysts were looking for a loss of $1.01 a share.

The news comes as Ford, under new chief Alan Mulally, seeks to slash employment by a third and to reinvigorate itself through a bolder product lineup. The company raised $23 billion last month, in part by pledging its automotive assets as security to lenders.

"We began aggressive actions in 2006 to restructure our automotive business so we can operate profitably at lower volumes and with a product mix that better reflects consumer demand for smaller, more fuel-efficient vehicles," said Mulally. "We fully recognize our business reality and are dealing with it. We have a plan and we are on track to deliver."

For the fourth quarter, Ford's worldwide Automotive sector reported a pretax loss of $2.5 billion, compared to a pretax loss of $109 million a year earlier. The decline primarily reflected adverse volume and mix and higher incentives in North America. North America Automotive operations reported a pretax loss of more than $2.8 billion, compared to a pretax loss of $217 million in 2005. The increased losses primarily reflected unfavorable net pricing, largely reflecting higher incentive spending, a reduction in dealer stocks, unfavorable mix and lower market share, partially offset by cost reductions. Fourth-quarter sales were $15.1 billion, compared to $21.4 billion in 2005.

For the full year, Ford's worldwide Automotive sector reported a pre-tax loss of $5.2 billion, compared to a pretax loss of $993 million a year ago. The decline primarily reflected unfavorable volume and mix, unfavorable net pricing and currency exchange, partially offset by favorable cost performance and higher interest income.

For 2006, Ford's North America Automotive operations reported a pretax loss of $6.1 billion, compared to a loss of $1.5 billion in 2005. The increased losses primarily reflected unfavorable net pricing, largely reflecting higher incentive spending, unfavorable mix, lower market share and a reduction of dealer stocks, partially offset by cost reductions. For the year, North America's sales totaled $69.4 billion, compared to $80.6 billion a year ago.

In the fourth quarter of 2006, Ford Motor Credit's net income was $279 million, down $26 million from a year earlier. On a pretax basis, Ford Motor Credit earned $406 million in the fourth quarter, compared to $482 million in the previous year. The decrease primarily reflected higher borrowing costs and higher depreciation expense, partially offset by market valuations primarily related to non-designated derivatives.

Total Automotive liquidity at Dec. 31, 2006 was $46 billion including credit facilities. The company's Automotive operating-related cash flow was $1.8 billion negative for the fourth quarter.