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News > Companies
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Ford warns on 4Q
graphic October 17, 2001: 12:34 p.m. ET

No. 2 automaker loss meets forecasts, sees tough quarter ahead.
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  • Ford warns on 3Q; Chrysler idles plants - Oct. 2, 2001
  • Ford cuts estimates - Sept. 14, 2001
  • Ford cutting managers, lowers targets - Aug. 17, 2001
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  • Ford Motor Co.
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    NEW YORK (CNNmoney) - Ford Motor Co. posted a big third-quarter loss Wednesday, hurt by falling sales and costly buyer incentive programs, and the No. 2 automaker warned Wall Street it will tough to return to the black by the end of the year.

    Dearborn, Mich.-based Ford said it lost $502 million, or 28 cents a share, excluding special items, meeting lowered forecasts after two prior warnings following last month's terrorist attacks. The company earned $994 million, or 50 cents a share, a year earlier.

    Sales fell 9 percent to $36.6 billion as worldwide vehicle sales sank 10 percent to 1.5 million. Auto sales sank after the Sept. 11 attacks on the World Trade Center and the Pentagon.

    Ford (F: down $0.28 to $17.40, Research, Estimates) stock fell at mid-session, hurt by loss, the warning and by General Motors Corp. (GM: down $0.51 to $43.46, Research, Estimates)'s extension of zero-interest financing.

    GM, which led the way with aggressive incentives after the attacks, extended them to Nov. 18 from Oct. 31. Ford Chief Financial Officer Martin Inglis said that while sales have been very strong in response, the cost of the incentives will pressure profits, even though Ford has yet to decide whether to follow GM and extend the program.

    "With the current marketing incentives that are out there and industry (sales) levels, it will be quite tough for Ford to earn a profit in the fourth quarter," he told CNNfn's Market Call Wednesday.

    First Call had been forecasting Ford to return to profitability with earnings of 6 cents a share in the fourth quarter. The company earned 64 cents a share in the fourth quarter a year earlier.

    All the automakers saw a sharp drop in sales in the immediate wake of the attack. Ford's results also were reduced by the cost of a zero-interest financing offer on new vehicles, which began in the last 10 days of the quarter. It also was hit by increased production costs due to the disruptions in its supply chain during the week following the attack.

    Even before the attack Ford was warning it would miss estimates for the period. Still, analysts had expected Ford to earn a profit of 10 cents a share before the attack. The company issued a warning three days after the attack that it would fall short of that level due to the supply chain disruptions.

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    By the time it reported September sales numbers Oct. 2, analysts were forecasting a 6 cent a share loss, but the company warned then that the loss would be greater due to the costs of incentives and a drop in revenue at its Hertz rental car unit, which was hit by the post-attack drop in travel.

    The company did see an improvement in European results, where it shaved its loss to $24 million in the quarter from $221 million a year ago.

    Click here for a look at auto stocks

    The company took a previously-announced non-cash charge of $199 million, or 11 cents per share, for the write-down of certain investments in e-commerce and automotive-related ventures. It also had a non-cash credit of $9 million, or about 1 cent a share, due to an accounting change. Including those items the net loss in the period came to $692 million, or 38 cents a share. graphic

      RELATED STORIES

    Ford warns on 3Q; Chrysler idles plants - Oct. 2, 2001

    Ford cuts estimates - Sept. 14, 2001

    Ford cutting managers, lowers targets - Aug. 17, 2001

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    Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

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    Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.

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