Ford Keeps on Cruising

Earlier this year, I got a big head start on the media when I called Ford (F) my “Stock of the Decade.” Perhaps I had been rushing things but you never know with these media phenomena.

The good news is that Ford keeps proving me right. Today the car maker reported earnings of 38 cents per share, 10 cents better than the Street’s estimate. This was Ford’s sixth-straight quarter of making a profit. The company is also working to pay down their massive (MASSIVE) debt.

Bolstering the financial performance, Ford also announced it paid down its revolving credit line by $2 billion and will make a cash payment of $3.6 billion on Friday to cover the last of its health-care trust obligations. The Voluntary Employee Beneficiary Association covers 195,000 retirees and their spouses. It was established by the U.S. auto makers and the United Auto Workers as of way of helping the auto maker reduce rising health care costs. The UAW has control of the trust.

These actions alone will reduce the company’s overall automotive debt to $22.8 billion from $27.3 billion at the end of June.

Ford also plans to lower its debt even further by offering two convertible debt securities in the fourth quarter. Holders will be offered a cash premium as an inducement for them to convert the debt into shares of Ford common stock.

The company has said that it expects all of its business units will be profitable in Q4 and next year. Not getting a bailout seems to help Ford among consumers. In North America, Ford’s pre-tax profit jumped from $314 million to $1.6 billion. Sales of F-Series pickups have picked up by 25% over the past year.

Posted by on October 26th, 2010 at 10:37 am


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