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For Ford Shareholders, What a Change from 2009

May 12, 2010
2 min to read


WASHINGTON - During the depths of the auto industry's collapse a year ago, Ford told shareholders at its annual meeting that they might have to wait until 2011 before the company started making money again.


It turns out they didn't have to wait that long.

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Thanks to well-reviewed cars and trucks, aggressive cost-cutting and goodwill from consumers for avoiding a taxpayer bailout, Ford Motor Co. has posted four straight profitable quarters, the Associated Press reported.


It has also more than doubled its stock price from below $5 last May, and seized market share from floundering rivals such as General Motors Co. and Toyota Motor Corp. Ford now expects to be solidly profitable this year.


And that likely means happier shareholders at Thursday's 2010 Ford meeting in Wilmington, Del. But there could still be some tough questions for Ford Chairman Bill Ford and CEO Alan Mulally.


Ford had $34 billion in debt at the end of the first quarter, much of it stemming from the company's 2006 decision to mortgage its factories and other assets for $23.5 billion to restructure its operations.


The debt puts Ford at a disadvantage to GM and Chrysler Group LLC, which have only a fraction of Ford's debt after shedding most of it during bankruptcy reorganization last year. Ford spent $1.5 billion in interest last year, or $311 per vehicle it sold worldwide.

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With the recession over and auto sales slowly improving, Ford will likely benefit more than many of its rivals, analysts say. Ford has been taking share from Toyota, which has recalled more than 8 million vehicles globally because of safety issues. It has newer products and a perception of higher quality than Chrysler and doesn't suffer from the taint of the federal bailout as GM does.


New Ford vehicles, such as the Fiesta subcompact for global buyers and Explorer SUV for North America will likely help the automaker expand into new markets and grab a greater share of U.S. sales, Merkle said. Those vehicles go on sale in the U.S. later this year.

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