Surprising most of Wall Street,
Ford (NYSE: F) turned a profit for the third
quarter. A
realprofit.
Yes, venerable Ford, the only one of the Once-Big Three
automakers to avoid bankruptcy in the last year, the company
given up for dead by those same Wall Street analysts as
recently as eight or nine months ago, posted a fat upside
surprise net profit of
almost a billion dollarson Monday morning. To be
precise, $997 million, or $0.29 a share.
That's real money.
Unlike
last quarter's surprise profit, this one wasn't made up
of "special items" like credits from debt restructuring. This
one's legit: Pre-tax operating profit was $1.1 billion.
Better still, while Ford's financial-services unit continues
to be a major profit center, $446 million came from the car
business.
Ford divides its world into four regions -- North America,
South America, Europe, and Asia Pacific -- and the car and
truck businesses in
all fourshowed positive results. That's the
company's first quarterly operating profit in North America
since
2005.
Ford's making real money from building and selling cars
and trucks. It's impressive evidence that Ford's long-shot
turnaround plan is working.
Isn't it?
Yeah, but …
I'll admit that I have a few qualms. And just so we're
real clear on this, I'm a Ford shareholder. Nobody wants to
see a spectacular Ford recovery
more than I do. But:
Cash for Clunkers is over. Did the
government program, which
ended in August, create an unsustainable spike in
sales, juicing these numbers?
Consumer spending is falling again. The
overall spending numbers fell in September, and auto sales
fell with them. Worse, unemployment's still high, which
means spending is likely to be low for awhile -- families
with an unemployed member don't tend to buy TVs and iPods,
much less new cars and trucks.
The UAW isn't being helpful . The union is
expected to reject a deal that would put Ford's U.S. labor
contract on a roughly equal footing with those of
post-bankruptcy General Motors and Chrysler, and closer to
the arrangements in place at
Toyota (NYSE: TM),
Honda (NYSE: HMC), and
Nissan 's U.S. facilities. This could leave
Ford at an ongoing competitive disadvantage.
These are all legitimate concerns. But I don't think any
one of them is likely to derail Ford's recovery. While we may
not have seen an end to money-losing quarters, Ford's
mortgage-the-company recovery plan seems to be working better
than just about anyone expected. The automaker should get
through next year's economic bumps without too much
trouble. Continued... |