Ford Posts an Unexpected Profit
Of $997 Million
The Ford Motor Co. posted a surprise third-quarter profit of $997 million on Monday and said it had had its first profitable quarter in North America in more than four years.
The carmaker also said that, at least temporarily, it had stopped rapidly depleting its much-needed cash reserves. It reported positive cash flow of $2.8 billion during the quarter, ending September with $23.8 billion.
Through the first nine months of 2009, Ford, the only Detroit automaker to avoid bankruptcy this year, has had a profit of more than $1.8 billion. Still, it has lost about $1.3 billion when one-time items, like a major debt restructuring, are excluded.
Until now, its goal had been to break even or earn a full-year profit by 2011. On Monday the company said in a statement that it “now expects to be solidly profitable in 2011, excluding special items, with positive operating-related cash flow.”
It did not indicate whether a fourth-quarter or full-year profit was expected this year, nor did it provide an outlook for 2010, citing continued economic uncertainty.
U.S. Manufacturing Shows an Unexpected Gain
The U.S. economy still faces a long slog back to normalcy, but there were signs on Monday that the wounded manufacturing and housing industries were on track to recovery.
The overall health of the manufacturing sector reached its highest level in three years in October, according to a report from the Institute for Supply Management, and employment in the sector grew for the first time in 15 months. The recovery was driven by increases in production and declining inventories — for example, assembly-line workers turning stockpiles of iron and steel into cars.
Manufacturing executives heralded the numbers as an indication that this engine of the economy was in “sustainable recovery mode.” But some economists urged caution, noting the government’s role in stimulating manufacturing through its cash-for-clunkers program, which offered thousands of dollars in credits toward the purchase of new vehicles.
States Ponder Fraud Suits
Newly empowered by the U.S. Supreme Court, the attorneys general of several states hit hard by the housing collapse are exploring consumer fraud suits against major mortgage lenders.
Frustrated by the banks’ inability or unwillingness to stop an avalanche of foreclosures, the states are considering lawsuits over the creation and marketing of millions of bad loans as well as the dismal pace of mortgage modifications.
Such cases would have been impossible until recently, because federal regulators had exclusive oversight of national banks. But a 5-4 Supreme Court decision in June allowed the states to exercise their own supervision, giving them significant leverage.
“We tried to use the tool to be persuasive with the banks,” Arizona’s attorney general, Terry Goddard, said in an interview. “But their waterfall of excuses, the abysmal numbers of modifications, tells us persuasion is not working.” As a result, he said, “we’re moving much closer to litigation.”