Ford Motor Co. Revs Up More Red & AT&T Rings Up Profits
Thursday, January 25, 2007PAUL KANGAS: Ford Motor did report its fourth quarter and year-end numbers today and they were dismal. Ford racked up one of the largest losses ever for a vehicle maker. But for another big name on Wall Street, AT&T, it was a totally opposite story. Erika Miller reports.
ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: Ford Motor Company suffered its worst loss in its 103-year history, losing $12.7 billion in 2006. That works out to over $24,000 a minute through the course of the year. In the fourth quarter alone, Ford lost $1.10 a share, $0.09 more than expected. The auto maker made a profit of $0.15 a share in the year ago period. Morningstar analyst John Novak says a major problem is product line.
JOHN NOVAK, AUTO ANALYST, MORNINGSTAR: The company is just not producing the products that people want. They lost a considerable amount of market share particularly in their high profit vehicles, that is their SUVs and their pick-up trucks. So as a result you really saw their revenue drop off. On the other side of the ledger, you have an uncompetitive cost structure.
MILLER: Ford's outlook is also bleak. The company predicts cash flow will be negative this year, and U.S. market share will erode further. The auto maker warns it will not return to profitability before 2009. Analysts say the big challenge this year will be winning concessions from the United Autoworkers Union.
NOVAK: This is a chance to reshape their relationship with labor and perhaps adopt a more flexible framework that will allow the company to restructure.
MILLER: AT&T shares escaped today's market downdraft after the company reported better than expected profits. The company earned $0.61 a share, up from $0.48 a year ago. Most of the gains came from cost cutting. AT&T is combining operations with the old SBC, as well as Bellsouth, parent of Cingular. S&P analyst Todd Rosenbluth says the company's prospects are bright.
TODD ROSENBLUTH, TELECOM ANALYST, STANDARD & POOR'S: We think it's about cost cutting. It's about integration and it's about the new products that they are offering. From the wireless perspective, the iPhone is something new that they're going to be launching.
MILLER: AT&T and Ford are the latest S&P 500 firms to report quarterly numbers. On average, companies in the index are reporting gains of 9 percent over last year with far more positive surprises than usual. Erika Miller, NIGHTLY BUSINESS REPORT, New York.
