Ford Reports Sharp Loss, Will Cut More Jobs

Ford Motor posted a worse-than-expected quarterly loss, set new cost cuts and said it would explore asset sales as it burned through cash due to slowing global demand that threatens the future of the U.S. auto industry.

The company's automotive unit depleted its cash by $7.7 billion during the third quarter because of production cuts, operating losses and upfront payments to Ford Credit to support consumer loan incentives.

The automotive unit ended the quarter with $18.9 billion in cash, including marketable securities.

Overall liquidity, including available credit, totaled $29.6 billion companywide.

Ford Chief Financial Officer Lewis Booth said he was comfortable with the automaker's liquidity and did not expect to tap into revolving credit lines. He declined to give an outlook on the cash burn rate or say whether the third-quarter pace was the fastest the automaker expected to see.

Booth also said Ford, along with other automakers in Europe, was participating in a bid to seek 40 billion euros of loans to support the industry. The request is similar to the U.S. $25 billion loan program to support improved fuel economy.

Ford, which has accelerated plans to shift North American production toward more fuel-efficient cars, said it would reduce salaried expenses by another 10 percent, following on a program that cut such costs 15 percent earlier in 2008.

The company has about 22,600 salaried workers in North America.

The automaker also said it would explore divestitures of other assets, such as office buildings as well as facilities it reacquired from former unit Visteon in 2005.

The Volvo car unit is not for sale, and Ford will continue to focus on improving its results, a company spokesman said. Volvo is the last remaining brand from Ford's former premier auto group that had included the divested Aston Martin, Jaguar and Land Rover.

Ford also plans more equity for debt swaps and other incremental sources of financing to support its balance sheet.

Quarterly Results

The automaker said its third-quarter net loss narrowed to $129 million, or 6 cents per share, from $380 million, or 19 cents per share, a year earlier.

The results include a gain of more than $2 billion from the approval of the voluntary employee beneficiary association aligned with the United Auto Workers.

Excluding these and other one-time items, the loss from continuing operations was $2.98 billion, or $1.31 per share, compared with analysts' expectations for 94 cents per share, according to Reuters Estimates.

(Insight on Ford's Q3 cash burn. Watch the accompanying video for more...)

Analysts have increasingly focused on whether Ford and rival General Motors have the cash needed to ride out an auto sector downturn that spread from the United States, where sales hit a quarter-century low in October. GM reports its quarterly results later on Friday.

Ford said it planned to cut capital spending by up to $1 billion, to a range of $5 billion to $5.5 billion. It also expects to cut engineering, manufacturing, information technology and advertising costs.

The company said about 2,600 workers represented by the United Auto Workers accepted buyouts in its most recent round, a stronger-than-expected response, a spokesman said.

Ford also said it would cut fourth-quarter production in North America by another 40,000 vehicles to 430,000 units, including a mix of cars and trucks.

Ford has been forced to reduce production to meet the declining consumer demand in North America and to address a shift toward smaller, more fuel-efficient cars and away from the gas-guzzling large trucks and SUVs that once had been the backbone of its profits.

Shares of Ford were up 5.1 percent at $2.08 in trading before the market opened. Through Thursday, the stock had fallen more than 70 percent in 2008, including hitting a 26-year low in October.

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