It's Ford Tough to Like Ford

[Deanh]

I am going to be completely honest...

 

 

Huh?

sorry if that is over your :cheerleader: head P, re-read your own post in response to PC.....FYI your current posts have stooped into dialogue reflective of regressive intelligence, even more so than normal....maybe a new thread should be started....Vote for the old or new P.........i'm on the fence, but the angry p was at least a little more humourous......

[RichardJensen]

Those charts are from Ford's 10Ks filed with the SEC so I think they are accurate. As far as operating costs, my definition is exactly correct.

Extraordinary items, like one time write downs are not part of either operating expenses or COGS.

O Hai.

 

Ur still so wronge

 

 

Special items, which primarily reflected costs associated with restructuring efforts and fixed asset impairments, reduced full-year results on an after-tax basis by a total of $9.9 billion or $5.29 per share. The total pre-tax effect of full-year special items was $11.9 billion.

 

http://media.ford.com/article_display.cfm?article_id=25271

 

kthx bye

[jobu37]

Those have nothing to do with operating income. Operating expenses are expenses incurred in normal operations,i.e. salaries and wages, insurance costs, floor space rental, electricity, computer maintenance contracts, software maintenance contracts, and so on paid in the areas that include marketing + SG&A + R & D.

One would expect write-off of this nature to be included in the extraordinary gain/loss section of an income statement as I would too. But one can just look at the income statements in each of the years that Ford has had the large write-offs and one can easily determine that the bulk of the write offs are happeing above op income. This is the same way that GM has handled it as well. Every industry has little idiosyncracies that are treated differently than standard GAAP and the automotive sector evidently gets to book these charges within the operational expense lines. Another example of different accounting treatment in the auto industry is the fact the automakers get to book revenue the minute a unit is produced as opposed to booking it when it is sold to dealers which would be the normal way this is accounted for in most industries.

 

Instead of spouting off where you think the charges were booked, try looking at the actual financials see for yourself. Truth be told, Ford has continually had positive gross margin growth for the past two years once one takes out the write-offs. They have outperformed GM by a wide margin. That have upcoming models that are going to be very large margin product (MKS, Flex, F150) which will only help to continue this trend. Even the Focus is bringing in an extra $1,000.00 per unit due to the rebate being dropped considerably compared to last year. In February, Ford reduced the average rebate used so this year's margin performance is already ahead of last year's albeit on lower volume due to overall market weakness.

[P71_CrownVic]

sorry if that is over your :cheerleader: head P, re-read your own post in response to PC.....FYI your current posts have stooped into dialogue reflective of regressive intelligence, even more so than normal....maybe a new thread should be started....Vote for the old or new P.........i'm on the fence, but the angry p was at least a little more humourous......

Ah...I see my spelling mistake...

 

EDIT:....and fixed.

Edited March 27, 2008 by P71_CrownVic

[mlhm5]

O Hai.

 

Ur still so wronge

 

 

 

 

http://media.ford.com/article_display.cfm?article_id=25271

 

kthx bye

 

What don't you understand about this income statement? Look at the automotive section, not the total company. Ford has lost $35 billion in operating income in this sector since 2001. The financial sector is the only thing at Ford making money.

 

So in the last 9 years (counting 2008) Ford has only had 1 profitable year in the automotive sector if its business.

 

[papilgee4evaeva]

What don't you understand about this income statement? Look at the automotive section, not the total company. Ford has lost $35 billion in operating income in this sector since 2001. The financial sector is the only thing at Ford making money.

 

So in the last 9 years (counting 2008) Ford has only had 1 profitable year in the automotive sector if its business.

 

 

It's hard to count '08 since it's only about 25% over.

 

But still, if you live in the past with stats all the time and fail to see what the company is working toward now, then you come up with predictions out the wrong end much like "the Giants will not sack Brady."

[jpd80]

So in the last 9 years (counting 2008) Ford has only had 1 profitable year in the automotive sector of its business.

 

You are right and yet, here we are.

[mlhm5]

One would expect write-off of this nature to be included in the extraordinary gain/loss section of an income statement as I would too. But one can just look at the income statements in each of the years that Ford has had the large write-offs and one can easily determine that the bulk of the write offs are happeing above op income. This is the same way that GM has handled it as well. Every industry has little idiosyncracies that are treated differently than standard GAAP and the automotive sector evidently gets to book these charges within the operational expense lines. Another example of different accounting treatment in the auto industry is the fact the automakers get to book revenue the minute a unit is produced as opposed to booking it when it is sold to dealers which would be the normal way this is accounted for in most industries.

 

Instead of spouting off where you think the charges were booked, try looking at the actual financials see for yourself. Truth be told, Ford has continually had positive gross margin growth for the past two years once one takes out the write-offs. They have outperformed GM by a wide margin. That have upcoming models that are going to be very large margin product (MKS, Flex, F150) which will only help to continue this trend. Even the Focus is bringing in an extra $1,000.00 per unit due to the rebate being dropped considerably compared to last year. In February, Ford reduced the average rebate used so this year's margin performance is already ahead of last year's albeit on lower volume due to overall market weakness.

 

Agreed, once the write offs are out, however those write offs kept happening each year for the past 8 years which has had a very negative affect on operating income. Since this has been going on for the past 8 years, Motley was forecasting the affect of continuing write offs on a go forward basis as had happened over the past 8 years and butting that up against the fact that Ford's unit share is declining in the USA and was postulating that on a go forward basis, Ford has to prove they can grow sales in the automotive sector at the rate of the growth of the GDP for some period of time for anyone to say Mulally's efforts were successful.

 

I think Mulally will return Ford to profitability.

[jpd80]

Ford has to prove they can grow sales in the automotive sector at the rate of the growth of the GDP for some period of time for anyone to say Mulally's efforts were successful.

No they don't, Ford has to prove North America can turn a profit on its current revenue, $70 billion/year.

There's no point increasing business volume with out addressing that point.

[jobu37]

Agreed, once the write offs are out, however those write offs kept happening each year for the past 8 years which has had a very negative affect on operating income. Since this has been going on for the past 8 years, Motley was forecasting the affect of continuing write offs on a go forward basis as had happened over the past 8 years and butting that up against the fact that Ford's unit share is declining in the USA and was postulating that on a go forward basis, Ford has to prove they can grow sales in the automotive sector at the rate of the growth of the GDP for some period of time for anyone to say Mulally's efforts were successful.

 

I think Mulally will return Ford to profitability.

Well Motley wasn't being very realistic. Motley needs to understand that Ford won't be buying out employees every year moving forward. They just don't have enough employees left to do that. While each write-off was primarily for employee buyouts, there were also other things snuck into it since when you are writing off 12 billion it is easy to sneak a hundred million reavaluation of an asset here or there. All companies do it so I'm sure Ford has too. It will be interesting to see how much of a loss Ford has to book on the Jag/LR sale. Everyone knows that they sold both for much less than what they bought them for but it is very possible that they have been writing them down over the years since it became obvious a long time ago that neither was worth what they paid for them.

 

In other words, every buyout has had little bit in it that will result in a future windfall for Ford on an income level due to writing down certain assets more than perhaps they should have. I wonder what the plant in Atlanta is on the books for. I would bet alot less than what Ford will be gettting paid for it. Same can be said for numerous plants all across the country, not to mention ACH holdings.

 

Motley should maybe take a look at operating cash flow which was a positive $36.5 billion last year and improving each quarter. Ford is getting very good margin performance in Europe and South America and growing top line revenue at a dramatic clip too. I suspect both will start slowing down after mid-year which is about the same time Ford's NA operations will be picking up on the margin side. So short of a total collapse of the U.S. economy, Ford stands well postioned to have a good 2009 with less write-offs. 2008 will still have the loss on the J/LR sale along with the last round of buyouts. But keep an eye on op cash flow to see how the company is really performing.

 

Your comment about Mulally and profitibiltiy is probably the most accurate and well thought-out comment you have ever posted on this board. Looking forward to seeing more comments like it, that are backed by analysis, instead of just pessimistic sky is falling crap you usually present this forum with. We already have Psario searching for every negative article or blog out there so we don't necessarily need another. However, it seems interesting that since you showed up Psario has been noticably absent for the most part. Makes one wonder if you two are one in the same since you both seem to have the same approach. You don't look for every opportunity to bad mouth the most profitable mid-size sedan sold in America as much as he does but maybe that is just so that your cover isn't blown.

[RichardJensen]

What don't you understand about this income statement?

I could ask you the same thing.

 

I am not certain you noticed that there are NO "SPECIAL ITEMS" lines BELOW "OPERATING INCOME", ergo, OPERATING INCOME INCLUDES SPECIAL ITEMS.

[jpd80]

Accounts are treacherous lot, they can shift money around like no others can.

Many times I've seen a profit turn into a loss in a matter of seconds........

 

Just ask Ford how they managed another loss but increased cash at hand by $700 million

[RichardJensen]

Asset writedowns, my good man, asset writedowns. Decrease in assets = decrease in capital = loss.

 

==

 

And, BTW, worst. blog title. ever.

[mlhm5]

Well Motley wasn't being very realistic. Motley needs to understand that Ford won't be buying out employees every year moving forward. They just don't have enough employees left to do that. While each write-off was primarily for employee buyouts, there were also other things snuck into it since when you are writing off 12 billion it is easy to sneak a hundred million reavaluation of an asset here or there. All companies do it so I'm sure Ford has too. It will be interesting to see how much of a loss Ford has to book on the Jag/LR sale. Everyone knows that they sold both for much less than what they bought them for but it is very possible that they have been writing them down over the years since it became obvious a long time ago that neither was worth what they paid for them.

 

In other words, every buyout has had little bit in it that will result in a future windfall for Ford on an income level due to writing down certain assets more than perhaps they should have. I wonder what the plant in Atlanta is on the books for. I would bet alot less than what Ford will be gettting paid for it. Same can be said for numerous plants all across the country, not to mention ACH holdings.

 

Motley should maybe take a look at operating cash flow which was a positive $36.5 billion last year and improving each quarter. Ford is getting very good margin performance in Europe and South America and growing top line revenue at a dramatic clip too. I suspect both will start slowing down after mid-year which is about the same time Ford's NA operations will be picking up on the margin side. So short of a total collapse of the U.S. economy, Ford stands well postioned to have a good 2009 with less write-offs. 2008 will still have the loss on the J/LR sale along with the last round of buyouts. But keep an eye on op cash flow to see how the company is really performing.

 

Your comment about Mulally and profitibiltiy is probably the most accurate and well thought-out comment you have ever posted on this board. Looking forward to seeing more comments like it, that are backed by analysis, instead of just pessimistic sky is falling crap you usually present this forum with. We already have Psario searching for every negative article or blog out there so we don't necessarily need another. However, it seems interesting that since you showed up Psario has been noticably absent for the most part. Makes one wonder if you two are one in the same since you both seem to have the same approach. You don't look for every opportunity to bad mouth the most profitable mid-size sedan sold in America as much as he does but maybe that is just so that your cover isn't blown.

 

My comment regarding Mulally was meant to infer that he has been very successful in cutting costs and gaining historic concessions from the union, which in my opinion will move the company into profitability in the short term.

 

Mulally's real challenge (the really hard work) is to stem the steady loss of its US market share to Asian competitors, which in a shrinking market will not be easy, however Ford has enough cash on hand to weather the current downturn, and tackle that difficult task.

 

Big changes will still needed to get the US division back on a growth track, i.e. shrinking the company even more and bringing out distinctive new models that people will line up to buy.

[SVT_MAN]

Accounts are treacherous lot, they can shift money around like no others can.

Many times I've seen a profit turn into a loss in a matter of seconds........

 

Just ask Ford how they managed another loss but increased cash at hand by $700 million

 

Very true. It's more useful to analyze cash flows than income or loss. Some companies show a loss for the tax benefits ...

[RichardJensen]

My comment regarding Mulally was meant to infer

The writer/speaker IMPLIES, the reader/listener INFERS.

 

I don't normally do this, but you =deliberately= chose 'infer' for reasons that make it vital that you use it properly.

 

Hint: improper word use doesn't impress anyone.

[RichardJensen]

At least anyone worth impressing.

[J-150]

At least anyone worth impressing.

 

 

 

I was impressed.

 

Does that count?

 

[rmc523]

I know...but it is killing me.

 

Anywho...you are stupid because you don't see the new Fords for the pieces of perfection that they are. Ford NA is the BEST THING EVER. Far better than anything in the whole of time.

 

You're almost finished.....

[mlhm5]

The writer/speaker IMPLIES, the reader/listener INFERS.

 

I don't normally do this, but you =deliberately= chose 'infer' for reasons that make it vital that you use it properly.

 

Hint: improper word use doesn't impress anyone.

 

Thanks for the grammar lesson.

 

BTW, if you want to emphasize use the underline or italics button. Capitalization of all letters in a word is reserved for acronyms, not emphasis.

[papilgee4evaeva]

Wow... telling a mod what to do? How audacious...

[bri719]

LINK

 

 

 

:reading:

 

 

whover wrote this hasn't looked at revenue growth anytime recently. and maybe not even factored in the most recent wave of cost cutting.

 

... and I am a subscriber to the Fool website so I will say most of their stuff is usually right on or very close to the mark. but opinions are like a-holes, everyone has one.