Transcripts

Ford Loses Billions But Bailout Is Not An Option

PAUL KANGAS: Another tough quarter for Ford Motor. The struggling auto maker posted a near $6 billion loss in the fourth quarter. Excluding special items, Ford lost $1.37 a share and that was $0.07 worse than analysts' expectations. Despite that discouraging news, the company says that it still has enough cash to make it through this year without a government bailout. As Diane Eastabrook reports, some analysts think Ford's predictions may be overly optimistic.

DIANE EASTABROOK, NIGHTLY BUSINESS REPORT CORRESPONDENT: Ford wasn't promising a stellar performance in the final quarter of last year and it didn't give one. But cost cutting did help the troubled auto company trim the amount of cash it burned in the quarter. In a statement today Ford CEO Alan Mulally said quote: the progress we continue to make in the fourth quarter gives us great confidence that we have the right plan, the right people and the right products to create a viable profitably growing Ford for all of our shareholders, end quote. Global Insight auto analyst Rebecca Lindland applauds Ford's progress, but thinks the company has an unrealistic view of the U.S. auto market this year.

REBECCA LINDLAND, AUTO ANALYST, IHS GLOBAL INSIGHT: They expect the market to be in that 11.5 to 12 million unit range. That is kind of a red flag because we're more in that 10.5 million unit range.

EASTABROOK: Lindland says sales could tank even more if consumer confidence keeps sliding and if the government doesn't pass a stimulus package with big tax breaks to consumers. Still, Ford is confident it can make it through the year. The company has about $13 billion of cash on hand and is tapping an existing $10 billion line of credit. Ford could also raise additional cash by selling its Volvo unit. Morningstar auto analyst David Whiston thinks a sale could come soon, but he's not sure this is the best time to sell the Swedish nameplate.

DAVID WHISTON, AUTO ANALYST, MORNINGSTAR: Although Volvo is a great brand, honestly at this point, it's really a buyers' market and Ford is not going to probably get what they want for it.

EASTABROOK: Ford insists it doesn't need to take government money the way General Motors and Chrysler have. Whiston thinks the economy will decide that.

WHISTON: As long as the economy does eventually recover in say very late '09, 2010 and their market share doesn't plummet, they should be able to get through this without a bailout.

EASTABROOK: Ford still remains confident that it will break even by 2011. Analysts think that could be a tall order and will probably only happen if the U.S. economy makes a spectacular recovery between now and then. Diane Eastabrook, NIGHTLY BUSINESS REPORT, Chicago.