The Ford Recover Falters: Have Ford Common Shareholders Been Wiped Out? (Revised)

CNN Money reports the Ford is missing almost all of its short-term targets for sales, market share and cost cuts as 2007 move along. An employee survey shows that only 47% of the companines have confidence in the company long-term plan.

Anthony Currie of web financial commentary site BreakingViews has done an analysis that say Ford’s common shares may be worth nothing. Taken into account are the unfunded pension liabilities, health care costs, debt, cash, and burn rate.

Not to be outdone, Merrill Lynch downgraded Ford’s (F) shares to "sell". According to MarketWatch, the reasoning from the brokerage was: "We believe that the market is pricing in a significant recovery in earnings by 2009/2010, and is not pricing in the risk of the at least three years it will take for results to recover, that is if they do."

Ford is certainly worse off than GM (GM). Its share of the US market is dropping to a level that could approach 14% this year. It operations in markets like China as not as robust as other large car companies. And, it started its significant restructuring several months after GM did.

It shows in Wall St.’s opinions. At the same time Merrill knocked down Ford, it upgraded GM (GM) from "sell" to "buy". This despite the fact that GM’s stock is up more than 60% over the last year while the Dow is up about 15% and Ford has only risen about 5%. And now GM is looking at buying Chrysler which would get its share of the US market back to about 37%, well over double Ford’s.

Ford took on $23 billion in additional debt recently. That may allow the company to survive, but it does drop the value of the common shares, at least in theory.

It will require a strong, strong turn up in Ford’s fortunes to get its stock to hold above $8 for any extended period of time.

Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.