- Summary: In light of Ford appointing Alan Mulally as CEO yesterday, the article takes a look at the performance of three major players, Ford Motor Co. (F), General Motors Corp. (GM), and Toyota Motor Corp. (TM) in the auto industry. The current landscape: Light vehicle sales: GM 24.8%, Ford 17.7%, Toyota 15%. Gross revenues: GM $205b, Toyota $185b, Ford $170b. Cash/Short-term investments: Ford $23b, GM $20b, Toyota $18b. Share prices change over past year: Toyota +30%, GM -3%, Ford -13%. Market capitalization: Toyota: $197b, GM $17.4b, Ford $15.4b. [Note the discrepancy; GM and Ford both trade at prices below their cash/short term investments; Toyota trades at 10x theirs.] Past 4-quarter profits: Toyota $12.6b, Ford -$1.6b, GM -$11.3b. Forecasted EPS for 2007: Toyota $8.22, GM $4.91, Ford -$.23. Question: Will Ford and GM continue to be dominated by foreign competitors, or can they take steps to regain favor in Wall Street's eyes? Bullish arguments: Today's pain and investor dissatisfaction will lead to cost-slashing and improved profit margins. Bearish arguments: Massive employee-benefit costs will continue to give foreign competitors a clear path to dominating the market.
- Comment on related stocks/ETFs: Ford's woes have been well documented. The article focuses on cost-cutting as the solution to the auto-makers' woes; others have argued with conviction that GM and Ford did not lose a million annual sales each just because of high costs—their products are not hitting enough hot spots. While GM has been aggressive in their cost-cutting, offering cash incentives of up to $140k to get union workers to retire, Ford has been looked at by Wall Street as playing a weak game of catch-up. Honda Motor Co. (HMC) is another foreign auto manufacturer that has been taking advantage of its weaker domestic counterparts to pull ahead of the pack. Not everyone has jumped on the bandwagon, though; Stephen P. Brown takes a bullish stance on Ford, just "because so few do."
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