Ford posts net loss of 12.7 billion in '06

Ford says it will lose money this year and next.
DEARBORN, Mich. (AP) -- Ford Motor Co. lost a staggering 12.7 billion in 2006 -- an average of 1,925 for every car and truck it sold.
The company that invented the assembly line and whose name was a byword for the auto industry warned it will bleed cash for two more years before it has a shot at making money.
Ford's loss, reported Thursday, was the worst in the company's 103-year history and came amid slumping demand for sport utility vehicles and other gas guzzlers and huge restructuring costs tied in part to the planned closure of 16 plants.
Last year's loss surpassed Ford's old record of 7.39 billion set in 1992.
A fourth-quarter loss of 5.8 billion helped drive up the red ink, which for the year amounted to 6.79 per share versus a profit of 1.44 billion, or 77 cents a share, in 2005.
Far from the worst
Although huge, the losses were far from the largest quarterly or annual corporate deficits on record -- Time Warner Inc. reported a 97.2 billion loss in 2002, largely due to new accounting rules about how to value assets. Ford could not rely on accounting rules, however, to explain its total.
Ford's loss also wasn't the worst annual total in the auto industry. General Motors Corp. lost 23.4 billion in 1992, due mainly to accounting rule changes on health care liabilities.
The Dearborn-based company predicted more losses for this year and in 2008, but Ford said its restructuring plan is on track to return to profitability in 2009.
"We know where we are. We are dealing with it and we're on plan," Chief Executive Officer Alan Mulally told reporters and industry analysts in a conference call.
Not surprising
Several analysts said the loss was not surprising, given Ford's high costs and falling market share and sales. Ford's future is cloudy at best, given the deficit that it must overcome, analysts said.
"They have a massive challenge in front of them. Their basic business is billions of dollars in the red," said Burnham Securities analyst David Healy.
Ford, which lost 6 billion on North American operations alone, said it expects to burn up 10 billion in cash to run its business through 2009 and spend another 7 billion to invest in new products.