Ford Planning $1 Billion Sale Of Preferred --- Move Surprises Wall Street; Firm May Post Losses For 3rd and 4th Quarters
DEARBORN, Mich. -- Ford Motor Co., saying it faces possible losses for the third and fourth quarters, moved to bolster its balance sheet by announcing plans to sell $1 billion of preferred stock.</br></br>The announcement surprised Wall Street analysts, who said that Ford has the best cash flow and liquidity of the Big Three auto makers. "Interest rates are low and I suppose they want to build up their war chest for capital spending," said David Healy, an analyst at S.G. Warburg & Co.</br></br>But Ford said in a filing with the Securities and Exchange Commission that it expects a loss for the just-ended third quarter. Because of economic uncertainty in Europe, and the overall weakness in the U.S. market, Ford said "losses could extend into the fourth quarter," partially offsetting first-half earnings of $840.3 million. However, Ford said results for the full year should "represent a substantial improvement over 1991 losses" of $2.3 billion.</br></br>This week, Allan D. Gilmour, who heads Ford's world-wide automotive operations, said the company remains committed to its aggressive product development programs despite economic weakness in the U.S. and in Europe, where Ford expects a loss for the year.</br></br>"In spite of these weak markets, particularly in Europe, Ford is maintaining its aggressive commitment to invest the resources to bring to market good cars and trucks, and to develop practical, functional technology for these new products," Mr. Gilmour said in a speech at the Paris auto show.