Just a couple of months ago, things looked so bad at Ford Motor (F) that a credit analyst wildly speculated that it could end up in bankruptcy. But such perceptions may soon change. After two years of piling up $6.4 billion in losses, the world's No. 2 carmaker is making money.
Cost-cutting and a jump in sales helped Ford net $900 million in the quarter, says Vice-Chairman and CFO Allan Gilmour. The results contrasted with a $1.1 billion loss in the year-ago quarter. Investors responded by bidding Ford shares up 10.5%, to $9.23.
Ford targeted $500 million in cost cuts for this year and has already beaten its goal, taking out $658 million in just the first quarter. "We wanted to get off to a fast start this year," Gilmour said.
Good thing. Rival General Motors (GM) has stepped up a price war in the second quarter with more incentives, and Ford followed. Even so, Gilmour says Ford will hit its profit target of $1.25 billion this year. Says Gilmour: "We're going to whack the bejesus out of our cost targets this year." And the more he whacks, the more the bankruptcy speculation recedes. The strong keep getting stronger. Amid a slowly improving tech environment, IBM (IBM) reported impressive earnings in the first quarter, driven by strength in its services and software businesses. Sales increased 11%, to $20.1 billion, while net income jumped 16%, to $1.4 billion, helped by the weak U.S. dollar. Excluding gains from currency, IBM's sales would have risen 4%. Still, analysts praised the results, noting that IBM continued to gain share in key markets. Chief Financial Officer John Joyce said the company is on track to meet revenue and earnings forecasts for the rest of 2003. In a conference call on Apr. 14, Joyce said that IBM's new products and services give the company "an unmatched ability to improve our customers' business models." To boost growth even more, Joyce said IBM will use its billions of dollars in cash flow to make acquisitions. Wireless providers and federal regulators are locked in a battle royal over the portability of your cell-phone number. The wireless operators asked a federal appeals court on Apr. 15 to block a regulation that would force them to let consumers keep their numbers when switching cellular carriers. Regulators plan to require that carriers start allowing number portability by Nov. 24. Not permitting it, regulators say, prevents users from switching in search of better service and prices. But wireless companies argue that letting users keep the same phone number will raise costs without sparking competition. A court ruling is likely to take several months. Media giants News Corp. (NWS) and Walt Disney (DIS) are heading for the showers. Phoenix businessman Arturo Moreno reached a tentative agreement to buy the World Series-winning Anaheim Angels from Disney for slightly more than $180 million. Since 1998, the Mouse House has spent more than $247 million to buy the Angels and upgrade the team's stadium. Meanwhile, the News Corp.-owned Los Angeles Dodgers are collecting bids, including one from Los Angeles real estate mogul Alan Casden. Malcolm Glazer, owner of the NFL Super Bowl champion Tampa Bay Buccaneers, and his son Ed are also mulling a $400 million offer for the Dodgers, which News Corp. bought in 1997 for $310 million. Major League Baseball must approve any deal. In what could result in a landmark victory for shareholder activists, the Securities & Exchange Commission on Apr. 14 said it would review rules that make it tough for investors to nominate directors to corporate boards. SEC Chairman William Donaldson asked staffers to come up with recommendations by July 15 for ways to make it easier for shareholders to run their own candidates for board membership. Those findings likely will form the basis for new rules the SEC may adopt in time for the 2004 proxy season. Fears that Philip Morris USA (MO) could end up in bankruptcy were assuaged when an Illinois judge backed down from his demand for a $12 billion bond to secure a recent class-action settlement. Instead, the U.S. tobacco giant will be able to use a $6 billion note from its parent, Altria Group, as collateral. That didn't deter credit agencies, which downgraded Altria earlier this month and continue to keep it on negative credit watch. In a conference call on Apr. 16, CFO Dinyar Divitre said low debt ratings have shut Altria out of the commercial paper market and forced it to suspend a $3 billion share buyback. -- Nasdaq named financial software executive Robert Greifeld as its next CEO.
-- Former WorldCom CFO Scott Sullivan faces new charges, of alleged bank fraud.
-- Starbucks (SBUX) will buy Seattle Coffee's 150 North American units for $72 million. Intel (INTC) shares rose 6% on Apr. 16, to $18.16, after the chipmaker beat Wall Street's first-quarter earnings and revenue estimates as processor prices remained firm. Investors also welcomed execs' optimism that Intel may report its best second-quarter results in years, thanks to an uptick in corporate PC purchases.