Who says you can't make money selling smaller, more fuel efficient cars? Ford CEO has been preaching that less can be more at Ford, and in the first quarter that strategy paid off. Ford made $2.6 billion in the quarter earning $.62 a share. With auto revenue being $31 billion, Ford easily beat the street which was forecasting $.50 a share on $29.7 billion in auto revenue.
It was Ford's most profitable first quarter since 1998. No wonder Ford CEO Alan Mulally was ebullient when I talked with him minutes after the earnings came out. Mulally told me, "We're in the best position we've ever been in."
Need proof? Ford is now net cash positive with automotive gross cash exceeding debt by $4.7 billion. Its revenue jumped 18% and profits surged 40%.
But this is Detroit, and this is Ford.
That's the reason there are skeptics out there wondering if Mulally and company can make this last? The answer is absolutely, provided Ford stays focused.
It has a broad, fresh line-up from small cars to pick-ups. And unlike years past, Ford is now pushing fuel efficiency so sales should hold up even as gas prices rise.
Mulally knows nothing is perfect and he's worried about rising commodity costs. Steel, rubber, oil and other commodities show no sign of slowing down. So far Ford has weathered the storm in part by raising prices, but Mulally knows he has to be judicious in his pricing moves.
Meanwhile Ford is still shy of it's target for market share. Mulally is determined to get there, but not at all costs. While Ford has become more aggressive with incentives to match or beat competitors, Mulally will doesn't want to sacrifice profits for market share.
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