Originally created 10/24/06

Ford loss largest in 14 years



DEARBORN, Mich. - Ford Motor Co.'s blue oval continued to bleed red ink in the third quarter, with the company posting a $5.8 billion loss Monday because of sagging North American sales and huge costs associated with a massive restructuring plan.

It was the largest quarterly loss in more than 14 years for the nation's second-biggest automaker, and company officials predicted things would get worse in the fourth quarter as market share drops and Ford pays for further plant closures to bring its manufacturing in line with lower demand for its products.

The July-September performance brings Ford's losses to $7.24 billion for the first nine months of the year, compared with a $1.87 billion profit for the same period last year.

The loss had some analysts worried Ford could face a cash squeeze before it begins to realize savings from job cuts, plant closures and other aspects of its restructuring plan.

"It's going to take awhile for those benefits to be evident in better earnings and cash flow," said Moody's Investors Service analyst Bruce Clark, who predicted that Ford would not see substantial savings until 2009.

Ford could be in dire shape if the economy slows or if there's a strike as the auto companies negotiate with the United Auto Workers union next year, Mr. Clark said.

"It's going to be a very tough environment. They are going to have to deliver in a number of areas," he said.

Moody's said Ford's performance was consistent with expectations that led it to downgrade Ford's long-term rating to B3, six notches below investment grade, on Sept. 19.

Ford's new chief executive, Alan Mulally, called the latest results unacceptable, but said he was encouraged by Ford's progress in turning itself around.

"This is a critical time," said Mr. Mulally, a former Boeing Co. executive who has been with the company a little more than a month.

"We clearly recognize it and plan to deal with the business realities we are facing," he told reporters and industry analysts in a conference call Monday morning.