Ford Motor Co posted a deeper-than-expected $2.98 billion quarterly operating loss on Friday and told investors it would take aggressive actions to further cut costs as it faces a severe slump in demand.
Weak demand for autos is being felt around the world, driving down shares of No. 1 automaker Toyota Motor Corp after it slashed its profit forecast for the year.
Ford warned investors it is burning through cash quickly and sources said Chrysler LLC is doing the same, as they struggled to survive the deepening global financial crisis.
Here's what the car companies are thinking. Survive until they are retooled, the recession is over and they have cars the public actually wants to buy. That means they have to hunker down, conserve cash and pray like hell they can survive. The problem is they are burning cash.
Ford Motor Co., with U.S. sales shredded by the worst financial crisis since the Great Depression, posted a third-quarter operating loss of $2.98 billion and said it used up $7.7 billion in cash.
The per-share operating loss of $1.31 was wider than the 93-cent average of 10 analyst estimates compiled by Bloomberg. Ford said it would trim more salaried jobs by January, deepen its fourth-quarter production cuts and shrink capital spending by as much as 17 percent.
Revenue plunged 22 percent to $32.1 billion, forcing Ford to triple its consumption of cash compared with the second quarter. Cash, cash equivalents and marketable securities for Ford's automotive business plummeted 29 percent to $18.9 billion on Sept. 30, the Dearborn, Michigan-based company said today.
``Cash burn is the No. 1 issue,'' Rebecca Lindland, an IHS Global Insight Inc. analyst, said in a Bloomberg Television interview. ``We associate cash burn with General Motors. It has not always been a problem with Ford. That is potentially a new problem.''
Ford is facing one hell of an uphill battle. First, we're clearly in a recession. Secondly, consumers' purchases of durable goods plunged 3.1% last month. Credit is tightening. And it doesn't look like we're going to get out of this situation anytime soon.