Kerkorian: Ford (F) And The Making Of A Dunce

Kirk Kerkorian will end up owning more than 5% of Ford after he completes his current tender. He does not like to lose money, so if things don’t get better at the car company, he might lose his temper.

The Wall Street Journal is of the opinion that Kerkorian may push for changes and that the Ford family, which has 40% of the voting shares in the firm, might stand in his way. The paper writes "The family could even come under pressure to give up some of their votes, if Ford’s already precarious position worsens."

There is no reason for the Ford family to give an inch. Like the clan that owns a controlling interest in The New York Times Company (NYT), they can drive the company into the ground if they want to.

Kerkorian gets into Ford at a time when it may be too late to do much at all. The firm will be hurt for a long time because it built its business around SUVs and pick-ups. Changing over to smaller cars will be take months and the Japanese are waiting at that end of the market with better models and hybrids which get  something like 100 miles-per-gallon.

Ford has good overseas operations. If a recession spreads to Asia and Europe, the company will be troubled in those markets as well.

Management at Ford has already cut about as much as it can. At some point the UAW is going to make a stand. Ford could also make itself so small that it will not be able to take advantage of an economic recovery. It may no longer have the production capacity.

Kerkorian is a sucker. It is lucky for him that he is rich enough that it won’t matter.

Douglas A. McIntyre