Ford Outlook Updated--Pluses and Minuses.

Posted by: David Kiley on December 10, 2007

Goldman Sachs auto analyst Robert Barris issued a reprt today updating his outlook of Ford based on a recent deep dive into the financials and product plans.

“What’s changed?.” writes Barry.

“We have done a “deep dive” review of our assumptions for the 2007 to 2011 period, incorporating a more thorough consideration of Ford’s new UAW contract and our latest outlook for global auto demand.”

“Our 4Q2007 EPS rises to -$0.29 from -$0.39 to reflect modestly better pricing and more moderate assorted cost headwinds vs our prior forecast. Our 2008 and 2009 estimates move down to $0.50 and $1.00 from $0.65 and $1.10, respectively. US macro risk and a weak Ford product cadence keep our estimates biased to the downside as we move into 2008.”

Implications
Ford’s global auto revenue is expected to grow by $9.8bn in the 2007 to 2011 period. We model growth in Europe and emerging markets, but see NA revenue falling $1.4bn, owing to share loss, market price pressure and mix shift towards smaller, generally lower priced vehicles.

“We model Ford realizing $4.5bn in structural cost reductions through 2011, including $4.0bn related to the new UAW contract, removing ACH employees, and buying out 10,000 employees in early 2008. However, variable cost is expected to grow $11.9bn on volume and content growth.”

Goldman doesn’t put a rating or target price on Ford.

Reader Comments

Noz

December 10, 2007 9:13 PM

Chances are that Goldman Sachs does not lease any Fords either. I certainly would not do so, it is bad for the image of the company. And since 'Suits' are mostly about image, certainly content is a far-off issue, well, this is important. ((Not really, of course, but then they don't live in the world as the rest of us see and deal with it.))

Ford is on its way to the bottom, a function of terrible management for far too long now. Not to mention its mediocre to poor products that even die-hards have finally abandoned. It is a race to the bottom among Ford, GM, and Chrysler. They all fail to realize that it is the product that sells the company, not the other way around. Toyota and HONDA are masters at this game, have been for decades, and they have won against the usual jingoism and outright racial bias practiced by so many in this world, especially the West where the money is and choices are greater, and excuses for GM & Ford more often offered. Hear me loud and clear MB? And LR? And VW? Line up and prepare to jump to your deaths...

Hanging on to Volvo is a matter of Ford's desperation in the extreme. Not only did no one else want it, the 'reliability' factor being far less than sterling, it turns out that no one cares about 'Swedish engineering', whatever that may be hyped to consist of. The so-called 'safety issue' evaporated years ago, it is no longer an exclusive. Volvo is now just a yuppie car, and even yuppies are going out of style. Botox here we come...

krishna Rajan

December 13, 2007 10:13 AM

Mr.NOz
I guess you have been compensated by the japanese automakers and so you do not have any nice words to say about FORD,GM and Chrysler.Unfortunately you are wrong and you will see Iconic companies like GM,Ford and Chrysler cannot go away they will reinvent themselves in a few years.
I think you are just a West coast californaian and who likes to buy a Honda and Toyota.Frankly quality wise the big three have bridged their gap and with the way TOyota and Honda micromanage their business they are going to have a lot of recalls in the near future.
So get ready to eat your own words in a few years time.
Without getting the facts right you are just a plain american basher ,my take is you should relocate to Japan and become a yes man to those Japanese automakers.

Noz

December 15, 2007 5:13 PM

Rajan, I love my words and would eat them in a flash, but this will not be necessary. Look back a ways and count the number of 'American Icon' car companies no longer with us. Being an icon means less than nothing if one is producing less than likable products--the case judging by the numbers. Yes, I am a native Californian, just one of the 85% driving 'imports' as opposed to Big Three iron often better-assembled in Canada and Mexico than within the 50 states (thanks UAW), if not way off shore.

Check out the past 10 Consumer Reports Annual Buyer's Guides in terms of reliability. Not CR's numbers, but those of the owners of all brands. Also check out the April issues of CR, autos only. I suspect you will be confused by the facts and then accuse CR of being in the pay of "Japan". I wonder just how that might work? And yes, I have no good words for GM, Ford, and Chrysler. They deserve none. Their lousy performance has earned -0- money, their execs making fortunes in the meanwhile.

I have been to Japan some 9 times now since 1972, and love the country and its people. But as a 6'3" barbarian, I am just too large to be comfortable. Furthermore, I am used to our slovenly behavior and feel out of place being polite 24/7. And I will add that the Japanese automakers need none of my help, they are doing just fine.

Mauricio

December 24, 2007 8:41 AM

Mr. Noz (or Mr. CR)

Being also a Barbarian I feel that your comment doesn't come from a real one. A real barbarian never seems so given and obliging to the japanesse automakers, as your words let see.

Moreover, a real barbarian should has the open mind to consider that the true can not be at his side o even more, it can change with the times.

Having you enjoy reading CR, read the numbers again, lastest issues not April please. Oh Surprise !!! ... Yes, there is honest american company doing the right thing ... and there is another falling in real quality problems ...

Oops, I forget the last recall of Tundras.

Just the last words to say that after two asian disasters at my family (our first cars, Hyundai and Toyota), we finally made a decision to buy american icons. After 6 years, 3 american cars have been with us ... none problem, needless to say more.

Maybe you are right, Japanese automakers need none of your help.

Jeff

January 8, 2008 2:01 PM

Ford hasn't put out a bad product overall (reliability anyway) for over a decade. Now they are catching up on sophistication as well. Consumer Reports puts the Fusion among the best cars sold in the US. Most of the rest get good marks as well. Personal experience also makes me consider Ford- I've owned quite a few cars in my life and my most reliable was a 1992 Ford Escort.

GM is still hit and miss, but with MANY terrific models.

Check the internet and you'll see engine and transmission problems plaguing Toyota right now.

I don't care what the numbers say, after two TERRIBLE Sentras I'll never fully trust Nissan. Will I give them another chance? Probably, but only when I have another car as backup and/or a very short commute.

I'll agree with Noz only on Honda and Chrysler. Honda makes some of the best cars on the market, and Chrysler only has one or two models worth considering.

Based on personal experience (and research on the internet and seeing a lot of agreement among those actually owning these cars), when I'm in the market for a car I primarily look at Ford, Honda, Hyundai (my Sonata was a good car, and a great value), and BMW. I check out and trust Subaru on reputation but haven't actually chosen one yet. I also check out Toyota, Nissan and GM (good experiences with Saturn and Olds, no bad experiences yet, but ratings from others are hit and miss), but they are all very much on a case by case basis (I don't trust them outright like the others).

bluedogg

April 21, 2008 12:48 PM

The good people need not worry about Ford. I was just a lad but i remember at our family reunions all through the 60's my uncles and cousins all had ford bankrup in three or four years. I heard this bull chit for past 40-45 years and ford and gmac both still standing. Ford and gm both will have difficult times -but here will be a 3000 ford and thereafter if times last--bluedogg

Kevin

April 17, 2009 9:07 PM

Hey Jeff

What year models were your troublesome Sentras?

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