FORD & GM downgraded

[MO]

Don't know if this is posted somewhere else,but in the last 24hrs Ford&GM have had their stock exchange investment ratings downgraded to triple b-.

In others words their stock/companies are not worth investing in,they're junk investments.

So what does this mean for the future of Ford,not to fussed about GM.

Anyone with any thoughts? RUSSELLW perhaps?

[Kryton]

doesnt sound real good. cant imagine them folding though.

[Damo]

don't these sorts of things fluctuate. I'm sure it will bounce back up. Interesting thread, can I call Bullshit first. :P

[MO]

Originally Posted by Damo

don't these sorts of things fluctuate. I'm sure it will bounce back up. Interesting thread, can I call Bullshit first. :P

NO you can't because its real.I thought I was hearing the news wrongly when I first heard it but it came up twice during this morning on Aunty.

[Ghiadude]

i thought it was just GM that was struggling...i was having a good giggle till i heard this....

[MethodX]

Shame on some of u.
GM makes the competition that keeps improving Fords

wish bad luck on the japanese makers instead

[gtfpv]

this is fact i seen a quiz in the paper once not long ago stating that the wealthiest company in the world is ford . richer than microsoft.

[WizBang]

if holden go under (which I can't see ) will that mean that toyota Avalon be in the V8 super cars next year .

[Kryton]

Originally Posted by gtfpv

this is fact i seen a quiz in the paper once not long ago stating that the wealthiest company in the world is ford . richer than microsoft.

well they must have a lot of $$$ coz if you watched the Apprentice the other night, with the new Pontiac Solstice (whatever the hell it was called), Trump was saying that GM are worth $25 Billion US. wouldnt mind knowing what Ford are worth globally.

[M&Ms]

I saw something about it on the business report, and it had Ford prices drop by 4.5% and GM drop by 6.0% (I'm assuming share prices? Could be wrong)
Maybe it's linked to the rising prices of petrol. (US$51 a barrel, It was not long ago they cost US$25 - US$30)

[Franky]

I'm pretty sure Ford is worth about $38 Billion US... that was in 2002

[russellw]

They were indeed both downgraded and it has as much to do with their debt / equity ratios and continued lack of real profitability as anything else. Without documenting GM's woes, Ford is losing money hand over fist in Europe and the US (in car manufacturing) and making small amounts in Asia (which includes us). In fact Ford global profits for the last few years have only managed to be in the black through the contribution of Ford Credit.

Yes it is true to say that these companies aare massive in terms of their capital investments but their ROI is appalingly low which will continue to impact on both their credit worthiness and their investor rankings. It is equally hard to see how they are going to fix the problems in the longer term and thus the downgrades are fair.

Russ

[loxxr6]

There's some more info on this here

[loxxr6]

Ford is losing money hand over fist in Europe and the US (in car manufacturing) and making small amounts in Asia (which includes us).

So what is it with these markets which isn't working ?

[FNQracing]

Originally Posted by loxxr6

So what is it with these markets which isn't working ?

Ford have been churning out junk (especially US) for decades. Very boring low quality hacks, to put it bluntly. The Japanese have it all over them in terms of quality and excitement.

US: Crap engines, crap chassis
EU: Crap engines, great chassis.

Its a formula they have stuck to for their valued customer base.

[Bossxr8]

Originally Posted by gtfpv

this is fact i seen a quiz in the paper once not long ago stating that the wealthiest company in the world is ford . richer than microsoft.

I think you will find that it is Toyota. They have billions in cash reserves. I think this months Wheels magazine has something in there about it. Its just a matter of time before they become number 1. Ford isn't really that wealthy at the moment, they are losing a heap of money in car manufacturing, its Ford Credit thats keeping them afloat.

[JPFS1]

This is something i was bagged for not too long ago when i spoke of the auto industry woes a couple of weeks ago.

Ford Aus may be in a fair bit of trouble from a manufacturing point of view, the Geelong engine plant will not last in the longer term.

Unfortunately the IL6 will be dead here and we'll be using a V6 of some sort sourced from the global ford parts bin. That's globalisation and this kills the economies, has a short term benefit, but the long term affects of globalisation of the large industries is whats killing global economies, among other things.

[INJECTED_250]

It would be bad to see a dodgy V6 in a Falcon, dont care what bit of the parts bin it comes from.

[Dave_au]

Originally Posted by Bossxr8

I think you will find that it is Toyota.

http://www.forbes.com/2005/03/30/05f2000land.html
World's biggest companies by profit:

1. ExxonMobil
2. Royal Dutch/Shell
3. Citigroup
4. General Electric
5. BP
6. Bank Of America
7. ChevronTexaco
8. Pfizer
9. Toyota
10. American Intl Group

Worlds best companies by overall balanced performance:
1. Citigroup
2. General Electric
3. American Intl Group
4. Bank of America
5. HSBC Group
6. ExxonMobil
7. Royal Dutch/Shell
8. BP
9. ING Group
10. Toyota
47. Microsoft
52. Mitsubishi Tokyo Financial - Banking (Mitsubishi Motor's "twin" - seperate entity, however is currently bankrolling Mitsub Motors - until they pull out)
55. Honda Motor
58. Tie - Ford Motor and Nissan Motor group
91. National Australia Bank

[Homer1]

Originally Posted by MethodX

Shame on some of u.
GM makes the competition that keeps improving Fords

wish bad luck on the japanese makers instead

And the Japs make the competition which GM and Ford should be matching but aren't. That's why they're going down. Ford and GM have only themselves to blame for not building better quality cars.

[RPO83]

The following statement is from Allan Gilmour, vice chairman and chief financial officer, Ford Motor Company:

“This change in Ford Motor Company’s credit rating does not reflect the fundamental strength of our business. Our Revitalization Plan is on track.
“On the automotive side, we have strong liquidity with nearly $26 billion in gross cash, less than $1 billion in debt coming due within five years, and a manageable pension liability with no mandatory contributions due before 2006.

“Actions by Ford Credit to reduce assets are ahead of targets and its profit performance continues to improve. Ford Credit has reduced its leverage while paying a dividend to the parent company, and liquidity and funding flexibility remain very strong.

“Earnings continue to exceed expectations. Our U.S. market share has stabilized and, importantly, our retail share is up. And we have accelerated our cost reduction efforts to eliminate waste and enhance efficiency throughout the business.”


I hope everyone read that carefully, because Gilmour retired some time ago. This statement was made in 2002 when S&P downgraded their stock amids concerns that Ford's 'Revitalisation' plan would be insufficient to pull the company out of the red.

Fast forwarding a few years later to 5th May 2005, and Ford releases another statement written by yet another executive vice president and CFO (Don Leclair) in response to Standard & Poor's changing credit ratings for the Ford Motor Company and its Ford Motor Credit unit to the non-investment grade rating of BB+ with a negative outlook.

"We disagree with S&P's action today. We're disappointed that it discounts our considerable liquidity and our access to diverse funding sources, as well as the recent successes of our new products.
As a company, we clearly see the competitive realities and challenges we face, and are committed to addressing them through the acceleration of our business plans, which will include continued cost-cutting, as well as essential investments in our future. While today's development presents a challenge, it doesn't shake our confidence in our future or our determination to achieve continued success as a global auto maker."

Can anyone blame S&P for the downgrade? Its also interesting that key documents for the media about Ford's 'Revitalisation' program from a few years ago have dissapeared. I'm glad i'm no longer an investor.

[TheSneakiness]

Originally Posted by Dave_au

http://www.forbes.com/2005/03/30/05f2000land.html
World's biggest companies by profit:

1. ExxonMobil
2. Royal Dutch/Shell
3. Citigroup
4. General Electric
5. BP
6. Bank Of America
7. ChevronTexaco
8. Pfizer
9. Toyota
10. American Intl Group

Worlds best companies by overall balanced performance:
1. Citigroup
2. General Electric
3. American Intl Group
4. Bank of America
5. HSBC Group
6. ExxonMobil
7. Royal Dutch/Shell
8. BP
9. ING Group
10. Toyota
47. Microsoft
52. Mitsubishi Tokyo Financial - Banking (Mitsubishi Motor's "twin" - seperate entity, however is currently bankrolling Mitsub Motors - until they pull out)
55. Honda Motor
58. Tie - Ford Motor and Nissan Motor group
91. National Australia Bank

Quite interesting that, notice how oil groups and refineries are way up there...

Just with company size there, where is GM?

[JPFS1]

Oil producers are the big winners here and this trend will remain this way.

Manufacturers will continue to suffer and will only get worse as the price of oil and other commodoties increases over time.

GM and Ford have nearly 600 BILLION dollars of debt between them.....

GM's pention scheme is underfunded by around 17 billion dollars... there are some serious issues here.... the only positive at the moment is the strong cash flow position that these companies have that should keep them alive long enough to work SOMETHING out.

[Dave_au]

Originally Posted by AUII_XLS_Ute

Just with company size there, where is GM?

65 Overall, made 3.69 US Billion profit last year, has 480 US Billion in assets, but only has a market value of 20 US Billion.

[Black XR6]

My wife works in the financial industry. It depends on who rated them and how. Was it a morning star rating or a stockists rating? You have plenty of leves of ratings.

That is just one groups opinion. Ford is always going to exist. Its just wether or not they are advisabel to invest with at that particular time in one groups opinion comparing them to every other investment.

There will always be better stocks to invest in than ford.

[Black XR6]

The government pensions are underfunded also.

I really cant see the australian government letting either GM or Fords australian companies go out of business. Nor can I see america letter them die, without some serious government aid

[parawolf]

This will just further push Ford China to be building the new cars of the next decade for Ford Worldwide. Development will be done in regional locations, however all castings, stampings and assembly will be done in China by 2010. This _WILL_ include the Ford Falcon, Focus, Fiesta and others that we don't have here that are around the world.

In fact this will push the 'global' large car platform issue again. Just hope that the Falcon gets a good look in.

[ford.boy]

I read someone's post here "goodbye to the l6" or words to similar effect.

I wonder, if Ford were colapsing their range of parts down to save on the cash (which is a valid strategy), would they cull the 6? Isn't this six one of the best in the world? It craps all over the 3.0 they slot into the taurus... Mountains more torque too.

Now with a man that has worked on this particular engine and getting it to the tune it is in as a high up in Ford Euro, and Euro Ford's crap engine line up wouldn't it make more sense to keep the l6 (even hack it into a l4 (not sure it's possible) but we'd end up with a sweet 2.6 litre 4 without too much tooling) So ford saves dollars, Euro ford and Aus Ford gets more cred with regards to global position and we get to keep our beloved engine.

Either way, Ford need to give themselves a new energy. This looks to be a company on the brink of being on the brink. Needs to be saved before it's too late and we develop another Leyland in australia :P

[RPO83]

Originally Posted by ford.boy

It craps all over the 3.0 they slot into the taurus... Mountains more torque too.

It won't crap over the Duratec 35 though.

The negative rating isn't an indication that Ford will collapse, its just a kick in the **** for being managed poorly. Dearborn can crap on all they like about the future, but if they can't do what they say can be achieved then there's good reason for their stock downgrade. If this persists then Bill Ford Jr. should take a long holiday.

[Dave_au]

Originally Posted by Black XR6

My wife works in the financial industry. It depends on who rated them and how. Was it a morning star rating or a stockists rating? You have plenty of leves of ratings.

If its about Ford's credit rating, it was done by Standards and Poors, which is a pretty big deal.

If your talking about my list, it was Forbes (my list) (US Equiv of BRW), which is generally regarded one of the number ones for general info for the Intl corporates. The overall calculation was based on a matrix that included sales, assets, market value and gross profit. Forbes would have obtained similiar infomation and analysts as used by Morningstar. Whilst the Forbes ratios does not directly look at items such as debt/equity ratios, these 4 areas they have selected would be subject to the on flow effects. Have a look at the link.