Ford Underwhelms Wall Street as CEO Has More Convincing to Do

  • New CEO Hackett pledges $14 billion cost cuts, pivot from cars
  • Strategy briefing light on details about new path forward

Ford Motor Co.’s new chief hit all the industry buzzwords in his inaugural investor address -- electrification, connectivity, autonomy -- but a dearth of details left Wall Street underwhelmed.

Chief Executive Officer Jim Hackett pledged on Tuesday accelerated work on green and driverless vehicles, more partnerships and acquisitions, a focus on the trucks and SUVs buyers want, and improved operational “fitness.” The plan included a few tangibles -- $14 billion in cost cuts and a $7 billion shift in spending away from passenger cars -- but not enough specifics for investors to grasp how, exactly, the century-old carmaker plans to navigate the new mobility landscape.

“While expectations were low, we were underwhelmed by the lack of detail,” George Galliers, an analyst at Evercore ISI, said in a note to clients Wednesday. Ford’s presentation “was generally lacking in the detail auto investors crave, with more McKinsey-like thought slides than those with actual numbers.”

Hackett, who just completed a months-long review of the carmaker he took over in May, has a tough task convincing wary investors Ford can compete against the electric, connected and semi-autonomous vehicles its competitors have already started rolling out. The automaker will debut its first long-range electric model in 2020 and still appears to be playing catch up, analysts said after the event.

Lack of Details

“While we don’t take issue with the principles themselves, they don’t seem to differ from what we know every other OEM globally is looking to pursue,” Galliers said. “What differentiates them is the lack of details and numbers.”

Ford shares opened lower Wednesday following the investor briefing before rising as much as 1 percent. The stock was up 0.7 percent to $12.43 at 11:53 a.m. in New York.

“We got the impression that Ford wanted to convey extremely high-level strategic objectives,” Adam Jonas, an auto analyst at Morgan Stanley, wrote in a report Wednesday. He said the automaker appeared to be “still working through the alternatives and has not yet achieved enough solidity on key partnerships to disclose anything significant.”

Ford’s decision to abstain from giving a 2018 profit forecasts also left Wall Street on edge. The company had said previously earnings would rebound next year after taking a hit on self-driving investments. Instead of reiterating guidance, Hackett “punted” to January, said Joseph Spak, RBC Capital Markets analyst.

“Our sense is more change will occur post 2019,” Spak wrote in a note after the presentation. “In the interim, Ford is fixated on improving efficiency and ‘fitness.’ It’s early in the turnaround but we believe Ford is on a focused and improved track.”

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