Ford Motor Co. will not have to drop any accounting bombshells like the one launched by General Motors earlier this week.
Ford spokeswoman Becky Sanch said Thursday, Nov. 8, the automaker doesnt expect further impacts from the deferred-tax issue that caused GM to take a $38.30 billion noncash tax charge on Wednesday, Nov. 7.
Both automakers have absorbed multibillion-dollar losses in recent years including $12.61 billion incurred by Ford in 2006. But as part of those losses, Ford took a $1.80 billion deferred-tax write-down during the third quarter of 2006, Sanch said.
Under accounting rules, companies can accumulate credits that can be used later to offset taxes on future earnings. With a murky financial picture ahead, GM elected under accounting rules to write off those future credits, resulting in the noncash charge.
Fords future financial picture also remains questionable, but analysts today said the companys outlook has improved.
Fords decision to produce fewer, but higher profit, vehicles continued to evidence traction in the third quarter through strong revenue growth, analysts from Goldman Sachs & Co. said in a report.
We think the economics could be favorable in 2008 if Ford is able to hold on to revenue-driven margin gains while making progress on structural costs, the analysts wrote.
Still, Goldman Sachs said Ford faces a variety of problems with vehicle pricing and a product pipeline we generally still consider weak.
Ratings agency Standard & Poors said Fords tentative contract with the UAW will be favorable compared with past agreements.
And we believe the contract will support the companys turnaround plan in North America, the statement said. Still, we remain concerned about the economic outlook for 2008, even as the company is making progress on its turnaround plan. Much of the labor contracts health care savings will not begin to accrue to Ford until 2010.
Ford stock closed down 28 cents, or 3.3 percent, to $8.20 a share on Friday. It began the week at $8.95 a share.