Ford likely to face impatient shareholders, analysts predict

Posted 8:11AM on Wednesday 8th May 2002 ( 23 years ago )

DETROIT - When Ford Motor Co.'s top executives face shareholders at this week's annual meeting near Los Angeles, they're likely to find investors anxious to hear about results, not promises, analysts say. "I would think you'll see some angry shareholders," said Michael Flynn, director of the Office for the Study of Automotive Transportation at the University of Michigan. "They'll be asking, `Now wait a minute, two years ago this was the number one stock, now it's trailing, how come'?" Flynn said. Ford shares closed down 29 cents at $15.64 in trading Tuesday on the New York Stock Exchange. Last May, Ford shares sold at around $30. Wall Street analysts say Ford shareholders will not soon see a reversal of fortune. "Actually, I'm selling on the stock right now. It's overvalued," said Michael Bruynesteyn, an analyst with Prudential Securities. "They don't have a large volume of new product." UBS Warburg analyst Saul Rubin agreed in a report released following Ford's first quarter earnings release last month. "With market share sliding, and cost-savings initiatives sub-par, EPS power should be poor for the foreseeable future," he said. Including a one-time charge for changing accounting standards, Ford reported a first quarter loss of $800 million, and $108 million excluding the charge, beating Wall Street expectations. Chief financial officer Martin Inglis said the company expected to exceed expectations for the second quarter. Prudential's Bruynesteyn agrees with that assessment but predicts the second half of the year will be tough. Ford's U.S. market share fell in the first quarter to 20.7 percent from 22.6 percent in the first quarter of 2001. Sales were down 7.8 percent in April, compared with those during April 2001. Ford spokesman David Reuter said the company has pulled no punches with shareholders about the restructuring plan it announced in January. The $9 billion turnaround plan calls for cutting 35,000 jobs and five plants and the elimination of four slow selling models. "We feel like we've been pretty forthcoming. Certainly we would welcome shareholder questions regarding any part of the plan," Reuter said. He doesn't expect chairman and CEO Bill Ford or other top managers will be put on the defensive once shareholders get their chance to face them at the open microphone. "I think management would be on the defensive if it's something we hadn't voiced publicly. We feel like we've been pretty upfront on the financial state of the company," he said. The meeting will be held Thursday at the Irvine, Calif., headquarters of Ford's Premier Auto Group, which is undergoing a management and product realignment. PAG is the umbrella for Ford's luxury brands: Jaguar, Land Rover, Aston Martin and Volvo. Ford announced last month that it would break off the slumping Lincoln and Mercury brands from PAG and return them to the Ford North American Consumer Business Group, which includes cars and light trucks bearing the Ford brand. Ford says it made the move when it realized that its U.S. luxury brands compete with other domestic luxury brands far more than they do with luxury imports. Several shareholder proposals will be voted on during the meeting including one by Evelyn Y. Davis, calling for disclosure of political contributions by the company. A proposal by Richard Mills of Inkster, Mich., would grant holders of Ford common stock shares the right to elect 60 percent of the directors on the board and holders of Class B stock the right to elect the remaining 40 percent. Shareholder proposals generally are voted down. This will be the ninth time Ford has held its annual meeting outside the Detroit area. Last year's meeting in St. Paul, Minn., had the lowest attendance ever with just 286, Reuter said. The highest attendance for a meeting outside the Detroit area was 482 in Cleveland in 1994, the first year Ford took its show on the road. Reuter had no estimate of this year's turnout but said there is a large concentration of Ford shareholders in southern California.

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