Storm clouds gather over Ford
06-09-06, 07:15 AM
#1
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Storm clouds gather over Ford
Company stock hits new low as firm cuts investment rating
In another ominous sign for Ford Motor Co., the automaker's stock price skidded to a 52-week low on Thursday after a prominent New York investment rating firm cut its debt rating another step deeper into junk status.
Citing a deteriorating financial picture and "sparse product pipeline" at the No. 2 U.S. automaker, Fitch Ratings lowered Ford's rating one level to BB minus -- three levels below investment grade.
The news drove Ford's stock price down 13 cents to $6.66, its lowest level in a year. The combined value of Ford's shares has fallen to $12.7 billion, about one-fifth of its value in mid-2001.
Fitch said that declining vehicle sales and concern over costs prompted the move, which came two days after Moody's Investors Service said it was considering a similar downgrade.
"The unfavorable trend of revenues and key cost factors is expected to result in accelerated negative cash flows through 2006 and 2007," Fitch said in a press release.
Ford's U.S. vehicle sales have slipped more than 3 percent this year as its bellwether sport utility vehicles sagged against newer competitors.
Sales of the midsize Explorer -- the nation's top-selling SUV -- have plunged 27 percent in the first five months of the year.
Ford recently launched an aggressive sales incentive program that includes zero-interest financing on most models and a debit card good for $1,000 in free gas.
Industry analysts have expressed concern about the pace and scope of Ford's so-called "Way Forward" turnaround plan.
While Ford has promised to close 12 plants and cut 30,000 hourly jobs by 2012, it has faced criticism for not giving more detail about its turnaround strategy.
"There is some impatience about Ford," said John Casesa of Casesa Strategic Advisors in New York. "Investors are waiting for signs of progress and they are not visible yet."
Ford posted a surprising $1.2 billion loss in the first quarter of this year, disappointing Wall Street and drawing unfavorable comparisons with turnaround efforts at rival General Motors Corp.
Closely watched industry studies show Ford still lags behind industry leaders in initial vehicle quality and factory productivity.
One automotive forecasting expert criticized Ford's product development schedule this week as lagging behind General Motors, Chrysler and foreign automakers.
"Ford's new product development -- or lack of it -- will haunt Ford for years, certainly through the end of the decade," said Erich Merkle, director of forecasting at IRN Inc. in Grand Rapids.
You can reach Bill Vlasic at (313) 222-2152 or bvlasic@detnews.com.
Source: http://detnews.com/apps/pbcs.dll/art...TO01/606090401
In another ominous sign for Ford Motor Co., the automaker's stock price skidded to a 52-week low on Thursday after a prominent New York investment rating firm cut its debt rating another step deeper into junk status.
Citing a deteriorating financial picture and "sparse product pipeline" at the No. 2 U.S. automaker, Fitch Ratings lowered Ford's rating one level to BB minus -- three levels below investment grade.
The news drove Ford's stock price down 13 cents to $6.66, its lowest level in a year. The combined value of Ford's shares has fallen to $12.7 billion, about one-fifth of its value in mid-2001.
Fitch said that declining vehicle sales and concern over costs prompted the move, which came two days after Moody's Investors Service said it was considering a similar downgrade.
"The unfavorable trend of revenues and key cost factors is expected to result in accelerated negative cash flows through 2006 and 2007," Fitch said in a press release.
Ford's U.S. vehicle sales have slipped more than 3 percent this year as its bellwether sport utility vehicles sagged against newer competitors.
Sales of the midsize Explorer -- the nation's top-selling SUV -- have plunged 27 percent in the first five months of the year.
Ford recently launched an aggressive sales incentive program that includes zero-interest financing on most models and a debit card good for $1,000 in free gas.
Industry analysts have expressed concern about the pace and scope of Ford's so-called "Way Forward" turnaround plan.
While Ford has promised to close 12 plants and cut 30,000 hourly jobs by 2012, it has faced criticism for not giving more detail about its turnaround strategy.
"There is some impatience about Ford," said John Casesa of Casesa Strategic Advisors in New York. "Investors are waiting for signs of progress and they are not visible yet."
Ford posted a surprising $1.2 billion loss in the first quarter of this year, disappointing Wall Street and drawing unfavorable comparisons with turnaround efforts at rival General Motors Corp.
Closely watched industry studies show Ford still lags behind industry leaders in initial vehicle quality and factory productivity.
One automotive forecasting expert criticized Ford's product development schedule this week as lagging behind General Motors, Chrysler and foreign automakers.
"Ford's new product development -- or lack of it -- will haunt Ford for years, certainly through the end of the decade," said Erich Merkle, director of forecasting at IRN Inc. in Grand Rapids.
You can reach Bill Vlasic at (313) 222-2152 or bvlasic@detnews.com.
Source: http://detnews.com/apps/pbcs.dll/art...TO01/606090401
06-09-06, 07:47 AM
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06-09-06, 08:08 AM
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Originally Posted by videcormeum
Ford stock has a Beta of 1.86.
06-09-06, 08:15 AM
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06-09-06, 08:24 AM
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Originally Posted by cip
that Ford has a homosexual agenda based on what at TV show aired for a few seconds.
Common' people. Just go to church and leave everyone else alone!
06-09-06, 08:42 AM
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Can you explain beta? Thanks.
- from the previously posted About.com article.
I can't say it better.
A beta of zero (0) indicates the risk-free rate (government securities) and a beta of one (1) indicates market risk/return. A beta over 1 indicates greater than market volatility and, thus, risk/return.
Here's the CAPM (Capital Asset Pricing Model) formula:
E(r) = rf + B(E(rm) - rf)
or
Expected Return = risk free rate + Beta x Expected market return minus the risk free rate.
The Beta x expected market return minus risk free rate is sometimes called a "risk premium"
Hope that helps.
M.
EDIT: I'll be a senior at USC's Moore School of Business in the fall (I'm studying finance) but you don't need to spend years of your life or tens of thousands of dollars in school to understand finance. Just read Wikipedia. I just looked and there's a very thorough article on the CAPM model ... just type in CAPM.
Last edited by videcormeum; 06-09-06 at 08:56 AM.
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06-09-06, 05:32 PM
#9
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Originally Posted by videcormeum
"The beta is a measure of a stock’s price volatility in relation to the rest of the market."
- from the previously posted About.com article.
I can't say it better.
A beta of zero (0) indicates the risk-free rate (government securities) and a beta of one (1) indicates market risk/return. A beta over 1 indicates greater than market volatility and, thus, risk/return.
Here's the CAPM (Capital Asset Pricing Model) formula:
E(r) = rf + B(E(rm) - rf)
or
Expected Return = risk free rate + Beta x Expected market return minus the risk free rate.
The Beta x expected market return minus risk free rate is sometimes called a "risk premium"
Hope that helps.
M.
EDIT: I'll be a senior at USC's Moore School of Business in the fall (I'm studying finance) but you don't need to spend years of your life or tens of thousands of dollars in school to understand finance. Just read Wikipedia. I just looked and there's a very thorough article on the CAPM model ... just type in CAPM.
- from the previously posted About.com article.
I can't say it better.
A beta of zero (0) indicates the risk-free rate (government securities) and a beta of one (1) indicates market risk/return. A beta over 1 indicates greater than market volatility and, thus, risk/return.
Here's the CAPM (Capital Asset Pricing Model) formula:
E(r) = rf + B(E(rm) - rf)
or
Expected Return = risk free rate + Beta x Expected market return minus the risk free rate.
The Beta x expected market return minus risk free rate is sometimes called a "risk premium"
Hope that helps.
M.
EDIT: I'll be a senior at USC's Moore School of Business in the fall (I'm studying finance) but you don't need to spend years of your life or tens of thousands of dollars in school to understand finance. Just read Wikipedia. I just looked and there's a very thorough article on the CAPM model ... just type in CAPM.
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