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November 02, 2009

Ford, The Private Option Of The Auto Industry, Posts Quarterly Profit

Wait, free enterprise works?

Ford, the only Detroit automaker to dodge direct government aid and bankruptcy court, surprised investors with net income of nearly $1 billion in the third quarter and forecast a "solidly profitable" 2011.

The automaker said Monday earnings were fueled by U.S. market share gains, cost cuts and the Cash for Clunkers program, which drew flocks of buyers to showrooms this summer. Ford's shares rose 68 cents, or 9.8 percent, to $7.68 in morning trading.

...The earnings came despite an $800 million revenue drop. But Ford said it cut costs by $1 billion during the quarter, accomplished through layoffs in North America and Europe, reduced pension and retiree health care costs and improvements in productivity and product development.

Chief financial officer Lewis Booth said the company took in $1.3 billion more than it spent in the quarter, an improvement over its $1 billion cash burn in the second quarter.

"That's a huge deal," Booth said.

Meanwhile, their government funded competitors are looking for a 3rd bailout of their credit arm.

Yes, Ford was helped by 'Cash for Clunkers' but that was open to everyone and it will be interesting to see how they fare when that artificial demand disappears.

One can only wonder how much better Ford would be doing it its competitors were forced to live with the consequences of their poor business choices.


*There's a discrepancy in the time stamp of this post with the time in the comments because I changed the blog time to reflect the end of daylight savings time. I manually changed this back to that new posts would show up at the right time. It was originally published at 11:59am


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posted by DrewM. at 12:26 PM

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