(TTAC) QOTD: Is Ford on Shaky Ground?

[RangerM]

Is Ford on Shaky Ground?

 

To anyone who reads my articles, (that’d be Bertel and my mother) you’d know that I’m not a big fan of Ford. Mark Fields is Susan Docherty for Ford, their cars underwhelm me, and I don’t really like the company as a whole. Having said that, I am a journalist. (Don’t laugh! I am!) And I am professionally impartial....

 

Not the way to persuade the reader by saying you hate the entity you're writing about and claim to be impartial in the first sentences.

 

But does he have a point?

Edited May 6, 2010 by RangerM

[NickF1011]

What a blow-hard.

[weiweishen]

Is Ford on Shaky Ground?

 

 

 

Not the way to persuade the reader by saying you hate the entity you're writing about and claim to be impartial in the first sentences.

 

But does he have a point?

This journalist related Ford debts situation to Greece debts situation. I have to say it does not make any sense. Let's look at Greek. Greek is a socialist country since Panhellenic Socialist Movement. In this country people get ridiculours Social Welfare. For example, all of government employee got 14 month payment, everyone get bonus just because they show up in office everyday on time. I do not know whether they get punishment for being late in office. After those government employee retired, they get very nice pension and after they died, their daught can keep taking their pension for several years. Greek is one of several Socialism European country that borrow money for the social welfare. Their debts many never been paid back until they can do some dramatic social reform. Their spending is much more than their earning. Greece debt to GDP ratio is 113% in 2009. This is really a bad balance sheets. Now let's look at Ford motor Company, Ford has 34 billion debts, that is not a good news. But Ford paid 3 billion on April and Ford is going to pay another 3.7 billion this year. Chinese geely will pay 1.8 billion to Ford for purchasing Volvo. That is pure cash. So by the end of 2010, Ford debts will be at least 6.7 billion less. Do not forget, Ford got 2 billion profit on the 1 quarter and Ford predict 2010 will be solidly profit. I do not know what means solidly profit, but I am sure 2010 profit should be much more than 2 billon, so Ford may even pay more debts off. I predict that Ford may have 25-27 billion debts by the middle of 2011 and their cash flow can still keep at least 25 billion. That could be a very healthy balance sheets.

[rkisler]

Is Ford on Shaky Ground?

 

 

 

Not the way to persuade the reader by saying you hate the entity you're writing about and claim to be impartial in the first sentences.

 

But does he have a point?

 

This "article" hardly warrants a respone, but I have a few comments:

 

1. Just because a person calls himself a journalist, doesn't make it so. There is absolutely nothing new in this article, and it could have been written by a high school sophomore.

 

2. The author states that Ford's share price has gone down "for no apparent reason." Have any of you looked at your 401(k) in the last week? Ummm, the market has taken a huge hit and there are very few stocks that have been unaffected.

 

3. The author's opinion of Ford's products or even Mark Fields' mullet is not relevant. What matters is Ford's performance in the marketplace, and Ford's executive performance. Although, on a personal level, I am somewaht concerned with Ford's succession plan as I believe Mark is a lightweight.

 

4. I rely on people like this author to make money. When everyone was piling on Ford last year and predicting bankruptcy, I bought Ford stock. And I bought Ford Credit notes on the secondary market which other investors were dumping. The notes are now starting to mature and have yielded 40-60% annual yield to maturity. Now you'd be lucky to get around 5.5-7% on similar notes with similar maturities. So that tells me that investors and rating agencies have a different viewpoint now about Ford's ability to pay than this uninformed author.

 

5. Sure the debt is huge, and Ford will have to run on all cylinders to earn cash to pay it down. But the elements are in place to make that happen. And I'm holding on to my Ford stock until 2011. At that point a lot of the product and plant investment that is absorbing cash right now with no output will be in place to actually produce product and generate cash. That's what the huge, well-timed loan was all about. And I'm not going to be in the market for a GM IPO.

[Edstock]

A tired, pedestrian little article of no importance.

[atvman]

Yes, Ford is on shaky ground. Another year of poor sales will be hard for Ford to make it through. I think they have the right people in place to keep them afloat though. In a few years, they should have a big chunk of that debt paid down and One Ford should be really paying off.

[NickF1011]

Yes, Ford is on shaky ground. Another year of poor sales will be hard for Ford to make it through. I think they have the right people in place to keep them afloat though. In a few years, they should have a big chunk of that debt paid down and One Ford should be really paying off.

 

I think Ford is flexible enough now that it could weather another downturn in sales. They have been excellent in recent months adjusting inventory levels properly.

[Noah Harbinger]

This journalist related Ford debts situation to Greece debts situation. I have to say it does not make any sense. Let's look at Greek. Greek is a socialist country since Panhellenic Socialist Movement. In this country people get ridiculours Social Welfare. For example, all of government employee got 14 month payment, everyone get bonus just because they show up in office everyday on time. I do not know whether they get punishment for being late in office. After those government employee retired, they get very nice pension and after they died, their daught can keep taking their pension for several years. Greek is one of several Socialism European country that borrow money for the social welfare. Their debts many never been paid back until they can do some dramatic social reform. Their spending is much more than their earning. Greece debt to GDP ratio is 113% in 2009. This is really a bad balance sheets.

 

Now, Greece may be socialist or not, and the things you say may be true or not... but from your post, I don't think you quite understand what socialism is.

[RichardJensen]

Austin's response was longer than the original article.

 

That guy's no more a journalist than I am king of Spain.

 

To address the question of debt simply and clearly:

 

What is Ford's cash position?

 

If Ford's business is generating positive cash flow, and they are able to pay the interest on their debts, there is no problem to speak of because they are not at risk of defaulting and they are not likely to need more debt financing.

[mackinaw]

Here's a quote from a real financial analyst, somebody who actually knows what he's talking about:

 

"I think the four-year transformation is beginning to pay huge dividends and the uncertainty now is less around Ford’s future in the market, which is very solid, and now is about the overall growth and pricing levels,” Brian Johnson, an analyst with Barclays Capital, told the Free Press last week."

 

http://www.freep.com/article/20100427/BUSINESS0102/100427010/Ford-reports--2.08-billion-profit

[FordBuyer]

Here's a quote from a real financial analyst, somebody who actually knows what he's talking about:

 

"I think the four-year transformation is beginning to pay huge dividends and the uncertainty now is less around Ford’s future in the market, which is very solid, and now is about the overall growth and pricing levels,” Brian Johnson, an analyst with Barclays Capital, told the Free Press last week."

 

http://www.freep.com/article/20100427/BUSINESS0102/100427010/Ford-reports--2.08-billion-profit

 

Ford's credit rating says it all......it has gone from C- to B over last year or so and more upgrades are in store assuming Ford keeps on doing what it has been doing. Ford is now only a few notches below investment grade. However, let's hope this plummeting Euro problem gets under control soon as Ford of Europe is integral to Ford's resurgence.

[RichardJensen]

Plummeting Euro is a long overdue correction in the exchange imbalance between the Euro & the dollar.

 

While deficit spending holds down the value of the dollar, the markets are finally assigning the risk premium to the euro that it deserves given the fundamentally shaky and tenuous basis of the EU as a currency.

[MY93SHO]

So, to be a journalist you just have to proclaim it?

 

Hell, I'm a brain surgeon!

 

I've watched both the Discovery and TLC channels AND I've stayed at a Holiday Inn Express! :shades:

[twintornados]

So, to be a journalist you just have to proclaim it?

 

Hell, I'm a brain surgeon!

 

I've watched both the Discovery and TLC channels AND I've stayed at a Holiday Inn Express! :shades:

The hell with proclaiming being a brain surgoen...I proclaim I am a porn star with a rather <ahem> huge "endowment fund" :hysterical: ...ladies???

[NickF1011]

The hell with proclaiming being a brain surgoen...I proclaim I am a porn star with a rather <ahem> huge "endowment fund" :hysterical: ...ladies???

 

Well, you might need a brain surgeon around after all those ladies <ahem> your brains out. :lol:

[Mark B. Morrow]

The hell with proclaiming being a brain surgoen...I proclaim I am a porn star with a rather <ahem> huge "endowment fund" :hysterical: ...ladies???

 

 

You can be anything on the internet. Even an expert on any subject. Just ask Matt/P71.

Edited May 6, 2010 by Mark B. Morrow

[Deanh]

You can be anything on the internet. Even an expert on any subject. Just ask Matt/P71.

looks liek hes Z71 Silvy now....and someone called him out......

[SVT_MAN]

I don't really see Ford's debt situation as a problem unless their trend of positive cash flow goes away. It's no different than an individual owning a home paid for with an extended mortgage. You aren't going to be in trouble and default unless your expenses become greater than your income. It's simple math at that point.

 

Yes, Ford is paying huge interest on their debt and their debt is not insignificant, but as long as Ford keeps turning profits, the debt will eventually go away. Plus, I suspect Ford will do a few more d-e swaps before we're done, too ...

 

Ford's debt ratio needs to be decreased, but having SOME debt isn't really a bad thing. They can write off the interest expense if I'm not mistaken ... (maybe the accountants can help me out here.)

 

I"m not worried at all. I still kick myself for not buying Ford stock when it was at about $1.00 last year. A financial advisor talked me out of it. Grr.

Edited May 6, 2010 by SVT_MAN

[waymondospiff]

I will now perform more "analysis" than the writer of the TTAC post did: No.

 

Thank you everyone. I can now be published on the internets as a journalist apparently.

[jpd80]

After all, TTAC does look through (GM) TARP colored glasses......

 

 

[AlRozzi]

Since he decided to relate this to Greece, following is a quote from an article about Greece's debt.

 

 

There are real costs to this debt burden. Carmen Reinhart of the University of Maryland and Kenneth Rogoff of Harvard showed in a study earlier this year that countries whose gross public debt exceeded about 90% of GDP grew about one percentage point slower each year than countries whose debt was below that level. They grew about two percentage points slower each year than countries whose debt was below 30 percent of GDP.

 

While there are large differences between a corporation and a nation, what if an inference could be made regarding the debt and growth rate for a country to a corportation? In Ford's case, $31B of debt to about $118B in revenue (where revenue equates to a nation's GDP) means Ford's debt is about 26% of revenue. According to the study, Ford would be in great shape.

 

Of course I am comparing apples to oranges, but if TTAC can do one form of analysis, then why can't I formulate my own analytical methodology? :stats:

[Mark8LSC CE0464]

Wow, I can't believe the article. At least he admits that he hates Ford and is "underwhelmed" by the great, recall free vehicles they are making.

[soupy]

 

 

.

 

5. Sure the debt is huge, and Ford will have to run on all cylinders to earn cash to pay it down. But the elements are in place to make that happen. And I'm holding on to my Ford stock until 2011.

 

But what if Ford starts paying a dividend by then? Say even 50 cents. Maybe even a dollar?

[grbeck]

Is Ford on Shaky Ground?

 

 

 

Not the way to persuade the reader by saying you hate the entity you're writing about and claim to be impartial in the first sentences.

 

But does he have a point?

 

A very simplistic article. ALL stocks fell last week.

 

Also - I believe that Cammy Corrigan is a she, not a he.

Edited May 11, 2010 by grbeck