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Ford Applies Brakes to Losses

There's a hole so wide in Ford's (NYSE: F  ) operations that you could drive a truck through it, but for one quarter anyway, that yawning maw of losses narrowed just a bit.

Ford reported that revenue for the quarter rose 5.4% to $43 billion, with automotive revenue coming in at $38.6 billion. That showing beat estimates, but it happened with no help from Ford's North American operations, which continue to weigh down the rest of the improvements that the "Way Forward" turnaround plan has seemingly generated.

Ford continued to lose market share to competitors in the region, dropping down to 10.1%, or a decline of 70 basis points. In part this was caused by unrest in the housing industry, but also because its once-popular F series pickup truck and sport utility line of Explorers have been hitting major headwinds. Where the new crossover vehicles like the Edge and Lincoln MKX have shown surprising results, the pickups and SUVs have been in decline, with sales of the F-150 off 15% and the Explorer down 25% in March alone. General Motors' (NYSE: GM  ) truck sales also dropped nearly 8% in March.

Ford's trucks have other issues, too. While the super-duty version of the F-150 has actually been experiencing strong gains, a money dispute with Navistar International limited production when Navistar shut down assembly lines last month. The super-duties make up about 40% of all F series trucks and last year had experienced particularly strong growth in the aftermath of the hurricanes that wreaked havoc in the Southeast. Management doesn't see the second or third quarters offering any better comparisons to go up against, either.

The automaker obviously has a lot riding on being able to come out of this uncontrolled tailspin. Aside from its storied history, Ford basically bet the farm on being able to succeed. It put up for collateral virtually all of its assets to secure new lines of financing and raised about $18 billion.

"This has been an encouraging quarter for the company, but turning around the business will not be quick," CEO Alan Mulally said.

The encouragement comes from cutting its net loss to $282 million, or $0.15 per share, an improvement over the loss of $1.4 billion, or $0.76 per share, recorded last year. It handily beat analyst expectations of a $0.60-per-share loss. The gains, if you want to call them that, resulted from earnings realized in its European and luxury-vehicle divisions, where it earned a pre-tax profit of $402 million.

Ford's "Way Forward" is still looking for a way around declining sales and tumbling market share. The company has agreed to sell the Aston Martin line, and with the other brands showing profitability, perhaps it could get a better price if it continues shopping those assets. Focusing on improving the North American market, and not hoping for some savior like Nissan (Nasdaq: NSANY  ) to bail it out, is what will ultimately be the key to getting profits to roll off the Ford assembly lines again.

At less than $10 a share, Ford is a cheap stock. A 30-day trial subscription to Motley Fool Inside Value, though, will show you why "cheap" doesn't necessarily mean it's a good value.

Fool contributor Rich Duprey owns shares of Ford but of no other companies mentioned in this article. You can see his holdings here. Nissan is a Global Gains selection. The Motley Fool has a disclosure policy.

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