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Shenanigans! Ford Announces Stellar Q4 & 2010 Results, Deemed Unworthy By Analysts

It may be news to you that — after announcing a profitable Q4 and stellar 2010 financial results — the price of Ford’s shares experienced a significant drop. Here’s a quick breakdown of the results Ford reported:

  • U.S. vehicle sales increased 19.5 percent in 2010
  • Revenue of $32.5 billion in the fourth quarter and $120.9 billion for the full year — an increase of $17 billion from full year 2009 (excluding Volvo from 2009)
  • Full-year net income of $6.6 billion — a number that’s occasionally referred to as “Toyota money”
  • Fourth-quarter income was $190 million — a decrease of $696 million from a year ago
  • Debt dropped by $14.5 billion – or 43 percent — from 2009 levels to $19.1 billion

With these results, you’d think Wall Street would be cheering for the Blue Oval and buying up stock by the bushel thousand! Unfortunately, that was not the case. As analysts pronounced themselves disappointed, Ford’s stock took a tumble to a low of $16.07 per share from the previous day’s high of $18.76 — representing a 16.7 percent drop.

This outlines the interesting (if not weird) scenario that can sometimes occur with publicly-traded companies: just because profit was significantly lower than the $886 million earned in fourth quarter 2009, analysts jumped ship. Interestingly, Ford had a very capital-intensive quarter — launching cutting-edge products and paying down a significant amount of debt. Aren’t these moves you’d want a car company (or any company, for that matter) to make? I’d think so.

So analysts punished Ford for failing to meet their expectations — which really has nothing to do with the automaker’s long-term viability or success. Ford reported a $6.6 billion net income — but the market deemed it unworthy! Weird how the market works, isn’t it?

Source: Automotive News

Motrolix Founder with a passion for global automotive business strategy.

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