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Ford Brings Back Dividend

December 8, 2011 by Leave a Comment

DETROIT – The Ford Motor Company on Thursday said it would resume paying quarterly dividends to its shareholders for the first time since 2006 as it closes out its third consecutive profitable year.

The company’s directors approved paying out 5 cents a share on March 1. Ford recently signaled that it was close to restoring its dividend, and analysts had been expecting an announcement soon, though some were forecasting a slightly higher amount.

The payouts will total about $200 million, Ford said.

“We have made tremendous progress in reducing debt and generating consistent positive earnings and cash flow,” William Clay Ford Jr., the company’s executive chairman, said in a statement. “The board believes it is important to share the benefits of our improved financial performance with our shareholders.”

Ford is the first of the three Detroit automakers to bring back a dividend and the only one to have avoided filing for bankruptcy during the 2009 recession. After closing numerous plants and cutting thousands of jobs as part of its restructuring, Ford has been focused on strengthening its balance sheet by paying down debt and improving its liquidity.

“The shareholders who have invested in us need to get a return on that investment,” Ford’s chief financial officer, Lewis W.K. Booth, said on a conference call with reporters. “As our business improves and our results improve, we’ll continue to look to see if we can increase the dividend.”

Mr. Booth said Ford expected that it could continue paying a dividend even if the economy worsened in the future. The company has historically cut its dividend during downturns to conserve cash.

Ford suspended its common-stock dividend of 5 cents a share in September 2006, a year after its credit rating fell into junk status. Company officials had said they intended to resume a dividend after regaining an investment-grade rating, but in October, Mr. Booth said the dividend might be restored even before that happens. Ford is currently rated one notch below investment grade.

Several analysts said the four-year labor agreement that Ford signed with the United Automobile Workers in October paved the way for the company to bring back a dividend in the first quarter.

Brian Johnson, an analyst with Barclays Capital, had projected an 8 cent dividend in the first and second quarters, and Adam Jonas of Morgan Stanley estimated that Ford would pay up to $1.2 billion in dividends next year, or an average of about 7.5 cents a quarter.

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Americans Flock to Car Showrooms With Wallets Open

December 5, 2011 by Leave a Comment

With analysts projecting that December will be even better, the industry is closing the year strong despite continued sluggishness in the nation’s economy. Consumers and businesses are finding they can no longer put off replacing their vehicles, which are now an average of almost 11 years old, a record.

Chrysler said sales for all its brands surged 45 percent in the United States compared with November 2010. Sales of its passenger cars more than doubled, and the Chrysler brand, which has been advertising heavily, reported a 92 percent increase. Sales of Jeeps climbed 50 percent for that brand’s best November since 2003.

Sales were up 13 percent for the Ford Motor Company. It sold 26 percent more trucks and sport utility vehicles but 9 percent fewer cars. Demand for the Ford Explorer S.U.V. more than tripled.

General Motors said its sales rose 7 percent. Sales of G.M.’s compact and subcompact cars, including the Chevrolet Cruze, were 54 percent higher, and it sold 31 percent more full-size pickup trucks.

“We are seeing a broad spectrum of customers return to the market,” Don Johnson, G.M.’s vice president of United States sales operations, said in a statement. “Truck sales showed a very solid increase, as we expected, but the momentum building behind our most fuel-efficient vehicles was even stronger.”

One automaker that did not report a gain was Honda, whose sales fell 6 percent. Honda’s operations were the most disrupted by the March earthquake and tsunami in Japan and the company is still working to fully rebuild its inventories. Toyota, which also experienced a sales downturn for much of the year, said it sold 7 percent more cars and trucks in November.

Nissan reported a 19 percent gain, led by higher demand for its Versa and Sentra small cars.

Many consumers who held off buying a new vehicle because of the uncertain economy, or because of inventory shortages that caused prices to jump, are now making a purchase. The result is a “mini-bubble” that will end in early 2012, said Edmunds.com, a Web site for automotive information.

The industry’s annualized selling rate, seasonally adjusted, climbed in November to 13.63 million vehicles, the highest since the government’s cash-for-clunkers program in August 2009. In June, the selling rate was 11.45 million.

Automakers are on track to sell at least 12.7 million vehicles this year, about 10 percent more than last year.

“People are now returning to the marketplace, and that’s what’s driving the sales increases over the last couple of months,” said Jeremy Anwyl, the chief executive of Edmunds. “But the idea that there’s a sustained turnaround under way and that this will continue is probably overstating things.”

But Ford executives said they expected the market to keep growing steadily, and they increased fourth-quarter production by 2 percent from the company’s previous forecast.

“The industry sales rate has exceeded 13 million in each of the last three months,” said Ken Czubay, Ford’s vice president for United States marketing, sales and service, said in a statement. “This suggests the current momentum is not an aberration. We believe replacement demand will continue to support stronger levels in 2012.”

November was the best month so far for G.M.’s plug-in hybrid car, the Chevrolet Volt. It sold 1,139 Volts, bringing the year’s total to 6,142. G.M. officials acknowledged Thursday for the first time that the company would not achieve its goal of selling 10,000 Volts this year after federal safety regulators said they were opening an investigation into the car’s 400-pound lithium-ion battery pack.

G.M. has since sent letters to all Volt owners to reassure them of the car’s safety, and it offered to lend anyone who was concerned about the issue a replacement vehicle free. It also has offered to buy back cars from dissatisfied owners.

Sales of the Volt’s primary competition, the Nissan Leaf, were 672 in November, for a total of 8,720 this year. Both cars were introduced in late 2010.

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Chrysler Is Last to Reach Deal With Union

October 12, 2011 by Leave a Comment

The union said Chrysler, which went through bankruptcy protection in 2009, also committed to investing $4.5 billion to retool plants for new models. It planned to lay out more details of the proposed contract, which covers 26,000 workers, at a news conference later Wednesday.

“This agreement is the latest in a remarkable turnaround for Chrysler,” General Holiefield, the U.A.W. vice president in charge of negotiations with Chrysler, said in a statement. “Chrysler has turned the corner and with this agreement will continue to move forward. It’s a new day at Chrysler.”

Chrysler, the smallest of the three Detroit automakers, was the last to reach a deal with the U.A.W. Negotiations there were the most difficult, as Chrysler executives took a hard line against any increase in labor costs.

The union last month ratified a new contract with General Motors that creates or retains 6,400 jobs. Workers at the Ford Motor Company began voting this week on a tentative agreement, reached Oct. 4, that adds 12,000 jobs. Both deals follow the same basic framework, giving workers signing bonuses of at least $5,000, raising entry-level wages and moving work from other countries, including Mexico, to American plants.

 “Together with the jobs created in suppliers and other businesses supported by auto manufacturing, a total of 180,000 jobs will be added to the country’s battered economy” if the Ford and Chrysler agreements are approved, U.A.W. President Bob King said in the statement. The 180,000 includes the new G.M. jobs.

G.M. has said its new contract increases labor costs by just 1 percent annually, an amount that prompted Standard Poor’s to upgrade G.M.’s credit rating. Ford and Chrysler were waiting until their deals are ratified before discussing them in more detail.

Chrysler’s chief executive, Sergio Marchionne, last week described the G.M. and Ford deals as “overly generous.” Chrysler was the only one of the Detroit companies to lose money in 2010 — $652 million — but it has since repaid $7.5 billion in high-interest government loans that were its largest hindrance to profitability.

Ford workers were scheduled to finish voting on their contract next week. The first big plant to vote, a compact-car assembly plant in suburban Detroit, narrowly rejected the deal Tuesday. Some Ford workers have complained that they deserved larger bonuses or a pay raise, which they have not received since 2003.

“I have no doubt in my mind that the agreement will pass,” Jimmy Settles, the U.A.W. vice president in charge of negotiations with Ford, said in an interview Saturday.

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Focus Is on G.M. as Contract Talks Resume

September 16, 2011 by Leave a Comment

Negotiators for the U.A.W. and G.M., the nation’s biggest automaker, reconvened for meetings after failing to reach a deal before their contract expired late Wednesday.

The union has agreed to a day-by-day extension at G.M. to complete the outstanding issues separating the two sides, including job commitments in plants, signing bonuses for workers and a pay increase for entry-level employees. Talks will resume 9 a.m. on Friday.

The union’s president, Bob King, has been conducting parallel talks with G.M. and Chrysler, the two Detroit automakers that were bailed out by the Obama administration in 2009.

But Chrysler abruptly asked for a weeklong contract extension on Wednesday night after Mr. King did not attend a scheduled session with Chrysler’s chief executive, Sergio Marchionne.

Instead, Mr. King seeks to set a pattern on wages and bonuses at G.M., and then try to match it at Chrysler and Ford Motor.

“It looks like the pattern, at least initially, is going to be set at G.M. rather than Chrysler,” said Arthur R. Schwartz, president of the consulting firm Labor and Economic Associates in Ann Arbor, Mich.

The union cannot strike either G.M. or Chrysler as a condition of their federal aid packages. That is not the case with Ford, which turned itself around without government assistance.

It is not unusual for the union to grant a contract extension if it is close to a deal with one automaker. G.M. has been determined to be the first company to settle and establish a cost structure that will help its comeback.

Mr. King, however, may find the going rougher at Chrysler, which is owned by the Italian carmaker Fiat and has yet to turn as profitable as G.M. or Ford. Mr. Marchionne was clearly peeved with Mr. King for not honoring an agreement to negotiate face to face on the last day before the current four-year deal expired.

The Chrysler chief executive sent a scathing letter by fax to Mr. King, noting that he had flown in from Europe to finish the negotiations. “You, unfortunately, could not be here, I am told, due to competing engagements,” Mr. Marchionne wrote. Mr. King received the fax in the middle of his discussions with G.M.

Mr. Marchionne then said he would be unavailable to meet with Mr. King again until next week. Mr. Marchionne also, for the first time, brought up the possibility of the contract being arbitrated if an agreement could not be reached.

“If that happens, nobody knows what we’re getting into,” Mr. Schwartz said.

Nick Bunkley contributed reporting.

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Despite Rising U.S. Sales, Automakers Are Struggling

August 3, 2011 by Leave a Comment

Honda and Toyota each reported large declines, as they have each month since production was slowed by the earthquake and tsunami in March. Toyota said it did not expect to post a year-over-year increase until early 2012. Sales fell 28.4 percent at Honda and 22.7 percent at Toyota.

Most other major carmakers reported modest increases, including gains of 7.6 percent for General Motors and 6.1 percent for the Ford Motor Company, which included 2010 sales by the Volvo brand, which it has since sold. Nissan, which avoided significant disruption after the earthquake, said sales were up 2.7 percent and even surpassed Honda to rank as the nation’s fifth-largest seller.

Chrysler’s sales rose 20.1 percent, but the head of its United States sales division, Reid Bigland, described the market as “tougher than a cheap steak.” Over all, light-vehicle sales rose 0.9 percent.

“The recovery is clearly in a stall mode,” said Paul Ballew, the chief economist at Nationwide Insurance and a former G.M. sales analyst. “It’s hard to see sales sprinting forward without some help on job and income growth. There’s a lot of wind that’s really out of the consumer’s sails right now.”

The seasonally adjusted, annualized sales rate climbed to 12.23 million in July, the highest since April, according to the industry tracking firm Autodata. The rate, a closely watched indication of the industry’s health, was 11.55 million a year ago and 11.45 million in June.

Analysts said they expected sales to rebound somewhat in the coming months but remain below the levels experienced in the first quarter, which would make for a disappointing end to a year that began with considerable promise.

Increases in unemployment and economic fears caused by the debt-ceiling debate in Washington were among the factors deterring car shoppers in July, analysts said. Even though Congressional leaders reached a last-minute deal to avoid a federal default, the issue will continue to cast a shadow on auto sales, said John Hoffecker, a managing director of the restructuring firm AlixPartners.

“What it brought to the forefront in many people’s minds is the shape the country is in, and raising the ceiling does not solve those concerns,” Mr. Hoffecker said. “We don’t see a significant pickup happening between now and the end of the year.”

In addition, the Japanese automakers still are working to replenish inventories of popular vehicles like the Honda Accord and Toyota Camry. Honda has said it expects plants to be essentially back to normal this month, and Toyota has said full output would resume by September.

But Randy Pflughaupt, a group vice president for Toyota’s United States sales administration, said dealer inventories would remain below year-ago levels through the end of the year.

Peter Nesvold, an analyst with Jefferies and Company, wrote in a report last week that “the Japanese companies should start to regain some of the market share lost over the past four months as production and inventory gradually improve.” Mr. Nesvold forecast that September would be the first month since April in which sales reflected true demand rather than low inventories.

Meanwhile, Toyota and Honda have been piling on discounts in the hopes of encouraging consumers to make a purchase. Incentives on Japanese vehicles were 24.5 percent higher in July than in June, at an average of nearly $2,000 per vehicle, according to Edmunds.com. That compares to an increase of 7.6 percent in incentives on all vehicles.

“With production working its way back to normal, the Japanese are making a strong play for their lost market share and American automakers may need to kick in more incentives as they fight for more consumers,” said Jessica Caldwell, a senior analyst at Edmunds.com, a Web site that provides car-buying advice for consumers.

Ford and G.M. have been affected by inventory issues, as well. Their most fuel-efficient models, including the Ford Focus and Chevrolet Cruze compact cars, have become scarce as consumers seek refuge from high gas prices, but the companies have been reluctant to add extra shifts given the fragile state of the economy. Instead, they are trying to increase output through lower-cost, less permanent actions like running some plants on overtime.

“We’re shipping everything we can to meet consumer demand,” said Ken Czubay, Ford’s vice president for United States marketing, sales and service. “But consumers are telling us they want two more than we can produce. We’re running flat out.”

At the same time, supplies of pickup trucks and larger vehicles have been ballooning, creating concerns among analysts that the companies will start slashing prices to keep dealer lots from growing too crowded.

The uncertain sales environment cut into the second-quarter earnings reported by Ford and Chrysler last week. General Motors is expected to report a second-quarter profit on Thursday.

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At Qualcomm, Rise of Founder’s Son Defies Hazards of Succession

June 13, 2011 by Leave a Comment

“We talk about the future of computing being mobile, but I don’t feel that way,” said Mr. Jacobs, 48. “I feel the present of computing is mobile.”

Mr. Jacobs has spent the last six years expanding Qualcomm’s business beyond his father’s tight focus on the digital wireless technology known as C.D.M.A. (code division multiple access).

While Irwin Jacobs, 77, the M.I.T. professor and electronics wizard who founded the company in 1985 and retired in 2005, was known for his dogged defense of the company’s intellectual property, his son Paul is more prone to talk breathlessly about a connected world where mobile devices diagnose our illnesses, turn on our lights, control our thermostats and allow doctors to remotely monitor our health in real time.

Such a family succession in publicly traded companies is rare; Ford Motor and Comcast come to mind. For it to succeed is rarer still.

Corporate governance specialists often disapprove of such successions. But the younger Mr. Jacobs has positioned Qualcomm, which builds chips for mobile devices, to lead the smartphone chip market as consumers increasingly do their computing in their palms and not tethered to their desks.

Last year Qualcomm dominated a diverse field of smartphone chip makers with 41 percent of the total market share in terms of revenue and nearly 61 percent of the market share for application processors used in smartphones powered by Google’s Android operating system, according to the market research firm Strategy Analytics.

Part of the company’s success is that the market for smartphones has been so robust. In 2010, smartphone shipments shot up 74 percent over the year before, while the market for PCs increased just 14 percent, according to the market research firm IDC.

Such huge growth in hand-held computers has rival chip makers like Intel, Nvidia, Samsung and Texas Instruments in a tight race to build smaller, more power-efficient chips, capable of running the increasingly complex apps, location-based services and graphics consumers have come to expect in their phones. Intel, which dominated PC chips, is late to this market, so it is anyone’s game to win.

Qualcomm’s strategy has been to create high-function, low-powered chip sets for smartphones and tablets that connect with other devices in various ways — a feat that has thus far largely eluded Intel. Qualcomm’s ARM-based Snapdragon chips are just such all-in-one processors.

“Qualcomm has a two- or three-year advantage in terms of integration,” said Stuart Robinson, an analyst at Strategy Analytics.

Qualcomm managed a leadership feat unusual in the modern business environment.

“Qualcomm has been able to do the handoff from father to son that most other companies have not been able to do,” said Cody Acree, an analyst at the Williams Financial Group who has covered Qualcomm and the chip industry for more than a decade.

“Paul is an engineer who owns patents in his own right and was a brilliant technologist before moving into this position,” he said. “And I think the industry as a whole respected him, knowing he was not just being given the job because it was his dad’s.”

Still, the stigma of nepotism trailed Mr. Jacobs. “I could walk into a room and people would just underestimate me. ‘You’re the son of Irwin,’ ” he said. “They would think, ‘This person is only here because of that.’ ”

The third of four sons, Mr. Jacobs took to computers early, learning to program in middle school on a Teletype terminal. Beginning in seventh grade he worked part time at Linkabit, another technology company founded by his father, which made communications equipment for the military. During college he worked summers at Qualcomm.

“Another thing that my father did for me was that every summer I worked in another area of engineering, so that by the time I went to college, I had done almost every kind of engineering there was,” said Mr. Jacobs, who went on to earn a Ph.D. in electrical engineering at the University of California, Berkeley, where he focused on robotics.

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S.&P. Closes at Highest Level Since June 2008

April 26, 2011 by Leave a Comment

Better-than-expected earnings reports from companies ranging from airlines to office products manufacturers helped drive a broad stock market rally that included all 10 company groups that make up the Standard Poor’s index. Industrial companies gained nearly 2 percent, the most of any group.

The Ford Motor Company reported its best first-quarter earnings since 1998. The carmaker topped Wall Street’s earnings estimates with stronger sales of new vehicles. Ford shares rose 0.77 percent.

The 3M Company, which makes Post-Its and Scotch Tape, said quarterly profit jumped 16 percent from a year ago, also topping analysts’ estimates. 3M raised its full-year earnings expectations despite taking a hit from the earthquake in Japan. Its share rose 1.9 percent.

Delta Air Lines said rising fuel prices played a large role in pushing its quarterly loss to 38 cents a share. Analysts expected worse. Delta shares jumped 11 percent.

The engine maker Cummins gained 7.6 percent after it said that it was raising its profit forecast for the year because of strong demand.

Shares of United Parcel Service rose 0.9 percent after it also raised its earnings estimate for the year after its quarterly results topped analysts’ expectations.

Coca-Cola’s stock fell 1.2 percent after its earnings per share fell a penny short of Wall Street’s expectations. First-quarter net income rose 18 percent as sales overseas gained strength.

The latest report on home prices, the Standard Poor’s Case-Shiller composite index of 20 metropolitan areas declined 0.2 percent in February from January on a seasonally adjusted basis, slightly better than forecasts for a drop of 0.3 percent. Prices in the 20 cities have fallen 3.3 percent from February a year ago.

At the close, the Dow Jones industrial average was up 115.49 points, or 0.93 percent, at 12,595.37, while the broader Standard Poor’s 500-stock index added 11.99 points, or 0.9 percent, to close at 1,347.24. The technology heavy Nasdaq gained 21.66 points, or 0.77 percent to 2,847.54.

The Dow is up 8.8 percent for the year, while the S.P. and the Nasdaq are up more than 7 percent.

Stocks also got a lift from a report on consumer confidence. The Conference Board said its confidence index rose in April after falling in March. The index is based on the board’s survey, which showed that worries about rising prices and unemployment eased. Among the encouraging signs, those who said jobs are “hard to get” dropped, while those who expected higher incomes rose.

The market’s continued rebound is crucial to luring nervous Americans back into investing in stocks, said Alan Gayle, senior investment strategist at RidgeWorth Investments in Richmond, Va.

Mr. Gayle says he talks to a lot of retail investors who were burned when markets dropped in 2000 and 2008 and remain wary of putting their savings into stocks.

“The stock market in the last 10 years has disappointed a lot of investors,” he said. “There are some lasting scars there.”

The Federal Reserve begins a two-day meeting on Tuesday. Economists expect the Fed will leave short-term interest rates unchanged and end its $600 billion bond-buying program in June as scheduled. The bond-buying effort has been credited with lifting financial markets since the Fed chairman, Ben S. Bernanke, first hinted of it last August.

Indexes in Europe closed higher as traders returned from the Easter holiday and shrugged off the latest bad budget news from crisis-stricken Greece.

After being closed since Thursday, the Dax in Frankfurt rose 0.84 percent. The FTSE 100 index in London was up 0.85 percent, while the CAC 40 in Paris was up 0.58 percent. Asian shares fell on disappointing quarterly earnings in the United States.

Greece’s struggle with its heavy debt burden produced more downbeat news, with the European statistics agency Eurostat saying the country’s budget deficit rose last year to 10.5 percent of G.D.P., above the forecast 9.6 percent.

A sharper revision of Greece’s budget deficit had started Europe’s debt crisis in late 2009, but this one was largely reported ahead of time in news media and priced in by the markets. The country has been bailed out by the European Union and the International Monetary Fund and is still struggling to avoid having to restructure its debts.

Analysts at Crédit Agricole said this revision’s impact was lessened by improvements in Greece’s formerly lax statistics keeping and by the announcement of more cutbacks to address the increased deficit.

“On the bright side, now that Eurostat and I.M.F. experts have labeled Greece’s public finances data as more reliable, one could expect this revision to be the last of a long series, and the Greek government already announced additional austerity measures to offset the corresponding fiscal shortfall,” they said.

In Asia, mixed American corporate earnings sent Asian stocks lower as traders waited for the Fed’s updated outlook on the world’s biggest economy.

Japan’s Nikkei 225 index closed down 1.2 percent, to 9,558.69 , with investors unloading blue chip shares ahead of what is expected to be a punishing earnings season. Nintendo announced Monday that its annual profit dropped for the second consecutive year as sales of its gaming devices fell.

Benchmark crude for June delivery was down 24 cents, to $112.04 a barrel in New York trading.

Article source: http://www.nytimes.com/2011/04/27/business/27markets.html?partner=rss&emc=rss

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