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Ford Motor Company (NYSE:F) is scheduled to release its first quarter operating results before the opening bell on April 27. Auto sales in the United States have been relatively strong through the first three months of the year, with Ford's year to date sales being up 8.6% over the first three months of 2011. The good news has continued to flow for Ford as earlier this week, Fitch increased its debt rating to BBB- from BB+, again making it investment grade.

Sales overseas are another story though, as the slowdown in the Chinese economy and economic problems in Europe have pressured sales overseas. Back in the U.S., Ford's Americas President Mark Fields warned earlier this month that Ford will continue to lose U.S. market share this year because it can't produce enough cars and trucks to meet rapidly rising demand; doesn't seem like such a bad problem to have. Over the past two years, Ford has been able to charge higher prices for its vehicles, which has easily offset the slight drop in market share.

Commodities are not nearly as big of a problem as in previous quarters as prices have come off their highs, however, the problem now stems from a shortage of a product used in fuel and brake lines, PA-12. A German factory that makes much of the global supply of PA-12 exploded last month, and automakers are scrambling to avoid shutting down assembly lines.

The company is expected to earn $0.36 per share on revenue of $32.3 billion. I am expecting a little better result with revenue of approximately $34.0 billion and earnings of $0.39 per share. The tax rate is expected to be a significant headwind during the quarter. Ford has been profitable for the past two years now, and now Ford has moved assets and tax credits that had been dormant back onto its books. As a result, its corporate tax rate is expected to jump from around 9% to 30%.

Though Fitch upgraded its rating, the other two major ratings agencies, Standard & Poor's and Moody's, are likely to watch the results closely. As part of a $23.5 billion restructuring loan taken back in 2006, Ford put up many assets (including the blue oval) as collateral. To successfully regain these assets, Ford needs to be rated as investment grade by at least two of the three ratings agencies.

Ford is my favorite of the automakers as it has a great new lineup and I expect the production shortages to be more than fixed over the coming three months. The big wildcard right now is the shortage of PA-12 and if it would cause shutdowns. As a fix, I expect much of the production to be switched out of the difficult markets (Europe) and into the United States, India, and South America. However, that is the worst-case scenario, and I do not expect it to come to that.

Going by segment, I am looking for strength to continue in North America with both revenue and margins improving, while South America will see margins that are relatively flat from last year. Asia's revenue growth is expected to slow as the economic growth in China has slowed. Europe is a completely different story. Ford has had problems in Europe over the past several quarters (no where near the headwinds that General Motors (NYSE:GM) has seen in Europe), and I expect those headwinds to worsen during the first quarter and into the second quarter. As a result, I have modeled for revenue of $34.0 billion and earnings of $0.39 per share, mainly as a result of a tax rate in the high 20% range.

Source: Earnings Preview: Ford Motor Company