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Behind The Wheel
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Ford's Mulally: 'We Are Turning The Tide'
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AP Alan Mulally |
Then again, when you are Ford and you continually turn in better than expected results, losing a couple billion is further proof business is turning around. It's the reason shares of Ford are surging. Somewhere, someone who bought Ford stock last November at it's low of $1.01 is celebrating their faith, and investment in this auto maker.
Ford CEO Alan Mulally was understandably upbeat when he told me this morning, "We are turning the tide in North America." Things have improved so much in the U.S. Mulally says the company will increase auto production by 25% in the second quarter. Compare that to GM (shutting 15 plants for up to 9 weeks) and Chrysler (preparing for a possible bankruptcy filing next week) and you see why folks are so upbeat at Ford.
The key to Fords improving results has been its ability to cut costs and slow down the rate at which it burns through cash. The operating cash flow was down $3.7 Billion, but that is a huge improvement than the second half of last year.
Look at the trend:
- 3rd Quarter: $7.7 Billion cash burn
- 4th Quarter: $5.5 Billion cash burn
- 1st Quarter: $3.7 Billion cash burn
Mulally won't change Fords target of being profitable by 2011, but the truth is this company could be back in the black before then. Especially if auto sales and the economy start to improve. The Ford CEO believes auto sales bottomed out in the first quarter and according to Mulally, "We've either passed or at the bottom for the business."
Like I said earlier, Seldom has losing almost $2 Billion (75 cents a share) looked so good, but when that loss is far lower than expected (Wall Street estimate was for a loss of $1.23 a share) the proof is in the numbers.
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