Now that Christmas is out of the way, it's time for that other "most wonderful time... of the year" -- year-end earnings season, when those companies whose fiscal years align sensibly with the calendar version report their fourth-quarter and full-year results. Next to report will be (still) No. 2 U.S. automaker Ford (NYSE:F), scheduled to tell its latest tale of woe tomorrow morning.

What analysts say:

  • Buy, sell, or waffle? Out of the 15 analysts following Ford, one rates the stock a buy, nine say hold, and five counsel selling.
  • Revenues. On average, analysts predict a 7% quarterly sales slide to $34.67 billion.
  • Earnings. And for losses to widen to $1.01 per share.

What management says:
Ford's already given us a bit of a preview of what to expect tomorrow. Earlier this month, the firm released its full-year 2006 sales results, showing an 8% decline in total vehicles sold. And although it might sound like good news that the firm's car sales climbed 5% year over year (the second year in a row of higher car sales), it's not. The only way to sell 5% more cars, yet have an 8% drop in vehicle sales, is to sell fewer of Ford's cash-cow pickups and SUVs. Sure enough, Ford announced a 14% drop in truck sales for the year. Even worse, it warned that it expects SUV and pickup sales to remain soft in 2007.

Had enough plain vanilla bad news? How about some ironic bad news: According to management, it's placing much of its hope for the new year in its new passenger cars and crossover utility vehicles (CUVs), which "should continue to benefit from ... higher gasoline prices." Newsflash, Ford: Gas prices are falling. Doh!

What management does:
Ford's trucks have a lot of horsepower to them, and I haven't enough space here to beat them all to death. Suffice it to say that things are bad, and could well get worse -- much like Ford's gross, operating, and net margins have been getting worse over the last four quarters.

Margins %

6/05

9/05

12/05

3/06

6/06

9/06

Gross

7.7

6.9

8.4

6.5

5.7

4.5

Op.

0.9

0.1

1.4

(0.6)

(1.4)

(2.8)

Net

1.2

0.7

0.8

(0.5)

(1.4)

(4.3)
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
There was some good news, however. The firm's announced production cutbacks are having an effect on the balance sheet, where Ford reported ending the year with 143,000 fewer inventoried vehicles this year than last -- 590,000 total. That should be a welcome change, and one we'll look to see reflected on tomorrow's balance sheet. Over the last two quarters, we've watched the opposite happen, as sales fell 4% (by value rather than units this time), accounts receivable headed the other way (up 15%), with inventories by their side (up 4%).

If the units at each year's year-end were approximately equal in value, then the 143,000-vehicle decrease in inventories could translate into as much as a 20% reduction in Ford's inventories, year over year. With dollar-sales presumably falling less than that (based on the same assumption), this looks likely to improve the cash generation figures considerably -- giving some comfort to its lenders, and giving new CEO Alan Mulally more room to maneuver as he tries to extricate Ford from this ditch it's driven itself into.

Competitors:

  • DaimlerChrysler (NYSE:DCX)
  • GM (NYSE:GM)
  • Honda (NYSE:HMC)
  • Nissan (NASDAQ:NSANY)
  • Toyota (NYSE:TM)

What did we expect out of Ford last quarter, and what did it decide was "Job 1?" Find out in:

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Fool contributor Rich Smith does not own shares of any company named above.