Ford Shares Dip on Lower Earnings Forecast

DETROIT (AP) _ Ford Motor Co. shares fell to their lowest level in more than a year Monday as investors absorbed news that the No. 2 automaker in the United States doesn't expect to meet its profit

Monday, April 11th 2005, 11:09 am

By: News On 6

DETROIT (AP) _ Ford Motor Co. shares fell to their lowest level in more than a year Monday as investors absorbed news that the No. 2 automaker in the United States doesn't expect to meet its profit goals in 2005 or 2006.

Ford lowered its full-year profit forecast on Friday to $1.25 to $1.50 per share from $1.75 to $1.95 per share. The company also said it doesn't expect to reach its goal of hitting $7 billion in pretax profits by 2006.

Ford shares fell 67 cents, or 6.1 percent, to $10.36 in early trading Monday on the New York Stock Exchange. Before Monday, they had been trading in a 52-week range of $10.94 to $16.48.

Merrill Lynch analyst John Casesa continued to rate Ford neutral in a research note Monday. He said Ford's action was expected, but that the magnitude of the cut was surprising. Casesa is predicting an 8 percent decrease in the automaker's second-quarter production _ an announcement that could come as soon as April 20, when Ford releases its first quarter results.

Casesa said Ford likely won't see much relief until the second half of the year, especially since Ford will have to follow rival General Motors Corp. this spring and ramp up incentive spending.

``Given rising raw material prices, rising health care costs and increases in other inputs, the automotive value chain is being compressed not only from the top down, but also from the bottom up,'' Casesa said.

Standard & Poor's on Friday lowered its outlook on Ford from stable to negative.

Ford's announcement came less than a month after GM, the world's largest automaker, slashed its full-year earnings outlook by more than half, citing poor North American business and rising health care costs.

The two companies, despite a spate of new vehicles in the past year, have struggled with medical and materials expenses and the continuation of heated competition with foreign automakers, particularly Asian brands such as Toyota Motor Corp. and Nissan Motor Co.

Ford said it does expect first-quarter earnings to exceed its previous guidance of 25 cents to 35 cents per share. Analysts are looking for earnings of 36 cents per share when Ford reports first-quarter results next week.