Excerpt from our Wall Street Breakfast, a one-page summary of this morning's key market-moving and stock-moving stories:
Ford Posts Loss of $5.8 Billion, Worst Since ’92 [New York Times]
Summary: Ford reported its biggest quarterly loss since 1992 yesterday, a staggering $5.8 billion. Despite the optimism and gung-ho attitude of new CEO Alan R. Mulally, the company has warned of even grimmer days ahead. The company is on track to beat Chrysler's $10.6 billion lost last year. Ford revised its expected profitability to 2009, rather than 2008. To reach this goal, the company has devised a restructuring plan called The Way Forward, which calls for upwards of 40,000 layoffs and twelve or more plant closings. The company is also selling off its British brand name Aston Martin, and might also be putting up Land Rover and Jaguar for sale. Many in the industry pin Ford's and Chrysler's financial freefall to overdependence on SUV and truck sales, which have become unpopular due to their poor fuel economy, a major concern in the current age of energy uncertainty. They have also failed to come out with cars that can actively compete with foreign competitors like Toyota, Honda and Hyundai. A major reason for Ford's massive quarterly bleeding was its drop to 15.5% market share, a loss of two percentage points as compared to 3Q05. The company also announced that they will have to restate earnings from 2001 through 2006 as a result of a change in accounting for derivative contracts.
Related links: Conference Call Transcript: Q3 2006 • Why Japanese Cars Earn $2400 More Profit Each • Detroit Gets it Right This Time • Forbes: Ford Motor Co. unsecured debt on CreditWatch negative - S&P • Detroit News: More Ford losses loom • Reuters: RESEARCH ALERT-Goldman upgrades Ford to "neutral"
Potentially impacted stocks and ETFs: Ford (NYSE:F), General Motors (NYSE:GM), DaimlerChrysler (DCX), Toyota (NYSE:TM), Honda (NYSE:HMC), Nissan (OTCPK:NSANY)
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