Ford's Goes Into Hock

Ford sent a signal that its cash on hand may not be enough to cover its restructuring and flagging sales The company will borrow $18 billion. It is a bad sign.

Ford has wanted the market to believe that it could exist on as little as a 14% share in the US, and that billions in cost cuts would allow its North American operations to make money. But, bloated inventories have undermined the car company’s ability to get dealers to accept new cars. And, recent research reports indicate that US car sales may be well below forecasts in 2007. Ford’s shrinking share against a shrinking market spells double trouble for the No.2 US car maker.

Ford’s stock has made a small recovery on hopes that its new CEO and cost cuts can improve the company’s fortunes. Ford’s stock has gone from $6.19 in July to it present price of $8,50.

With this much debt on the way, the stock may not hold its gains.

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

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