The Ford Recover Falters: Have Ford Common Shareholders Been Wiped Out? (Revised)

By Douglas A. McIntyre Published Feb 17, 7:27AM EST

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CNN Money reports the Ford is missing almost all of its short-term targets for sales, market share and cost cuts as 2007 move along. An employee survey shows that only 47% of the companines have confidence in the company long-term plan.

Anthony Currie of web financial commentary site BreakingViews has done an analysis that say Ford’s common shares may be worth nothing. Taken into account are the unfunded pension liabilities, health care costs, debt, cash, and burn rate.

Not to be outdone, Merrill Lynch downgraded Ford’s (F) shares to "sell". According to MarketWatch, the reasoning from the brokerage was: "We believe that the market is pricing in a significant recovery in earnings by 2009/2010, and is not pricing in the risk of the at least three years it will take for results to recover, that is if they do."

Ford is certainly worse off than GM (GM). Its share of the US market is dropping to a level that could approach 14% this year. It operations in markets like China as not as robust as other large car companies. And, it started its significant restructuring several months after GM did.

It shows in Wall St.’s opinions. At the same time Merrill knocked down Ford, it upgraded GM (GM) from "sell" to "buy". This despite the fact that GM’s stock is up more than 60% over the last year while the Dow is up about 15% and Ford has only risen about 5%. And now GM is looking at buying Chrysler which would get its share of the US market back to about 37%, well over double Ford’s.

Ford took on $23 billion in additional debt recently. That may allow the company to survive, but it does drop the value of the common shares, at least in theory.

It will require a strong, strong turn up in Ford’s fortunes to get its stock to hold above $8 for any extended period of time.

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

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.