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Ford caution may hurt stock


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Ford caution may hurt stock

Prices drop two straight days after report



Ford might have taken the wind out of its own stock price momentum on Tuesday when it warned that it might not be able to match first-quarter profits over the next several quarters.

Ford's stock dropped 89 cents Tuesday and another 32 cents Wednesday, closing at $13.25.

The declines came after Ford said it made $2.1 billion for the January through March period -- nearly twice what Wall Street analysts expected.

But some analysts have latched onto Ford's warnings about lower quarterly profits -- even though the automaker is on track to achieve its most profitable year in 11 years.

"Ford had a very strong first quarter, but we do not think this level of profitability is sustainable" on a quarterly basis, Credit Suisse analyst Chris Ceraso said in a report Wednesday.

"I think yesterday we saw the market swinging from an outlook that was looking a year or two out to worries about the second half" of the year, said Barclays Capital analyst Brian Johnson.

Even though Ford said it now expects to be "solidly profitable" in 2010, Ford Chief Financial Officer Lewis Booth also said quarterly profits might shrink.

"It would be unwise to think of the $2 billion as a running rate for the year," Booth said Tuesday.

Booth said rising commodity costs for materials such as steel as well as the cost of launching several new vehicles could hold down Ford's quarterly profits.

Johnson, however, estimates that Ford will report a profit of $1.57 per share, or about $4.9 billion, this year and $1.85 per share, or about $5.8 billion, for 2011.

That means Ford is on track for its most-profitable year since 2000, when it earned $3.48 billion, and would cap off a turnaround effort that was launched in 2006 with the company's Way Forward plan.

Johnson also said some investors expected Ford's first-quarter cash flow to be higher and speculated that the general market woes of the past several days caused by concerns about Greece's ability to make its debt payments also hurt Ford's stock price.

However, Ford's modest cash flow didn't faze Standard & Poor's, which raised its Ford outlook to positive from stable.



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excuses excuses ...by the anal-ysts


the giant program traders all knew the approx profit for the last 2 weeks - hence the stock price run-up


then they all sold (ie took profits) as soon as the avg-joes heard the news

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