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Ford has only made a partial recovery
Rallying from the brink is a rare character trait, which few possess. For a change, ailing American automotive giant Ford Motors seems to have it. Even after analysts had lost all hope on American auto makers, Ford has stunned everyone with its $750 million profits for Q2, 2007.
Amidst the criticism, the profits have acted as a saving grace for thecompany, which was reeling under insurmountable losses of $1.3 billion last year! It is believed that the raison d’etre behind these unexpected profits has been impressive performance of Ford’s overseas markets in Asia Pacific & Latin America. North America continues to bleed though, with losses of $279 million. Effective contributions came from Ford South America ($255 million), Ford Europe ($262 million) & Premiere Auto Group (PAG, $140 million).CEO Alan Mulally said, “Our team is very encouraged by the significant progress we are making.”
Mulally cannot ignore, however, that the biggest boost for Ford has been the Aston Martin sell off, which infused $925 million into Ford’s coffers. Furthermore, the company is apparently looking to sell off all PAG brands. As a further cost-cutting exercise, Ford has reportedly cut close to 6,400 jobs in North America, saving it almost $600 million in second quarter. Of course, with such massive milking of assets, this latest trickle of black stops well short of a rally. And by blindly selling of high value brands, the company only seems to be delaying the inevitable.
Edit bureau: Karan Mehrishi
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Source : IIPM Editorial, 2008
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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