Ford shareholders want out - Top Stocks Blog - MSN Money
 
Search Top Stocks:

Ford shareholders want out

Posted Jun 10 2008, 06:54 PM by Charley Blaine
Rating:
Filed under: , ,

Here's a sign of the times, and, with the price of gasoline topping $4 a gallon, hardly a surprise. 

Ford Motor Co. investors have flocked to Kirk Kerkorian's offer to buy 20 million additional shares of the company, a move that will help the billionaire investor increase his stake in the auto maker to about 5.5%.

Kerkorian's Tracinda Corp. said Tuesday that its tender offer of $8.50 a share drew overtures of more than 1 billion of the company's shares -- or nearly half of Ford's outstanding stock. Tracinda will buy 20 million shares for about $170 million. Tracinda could have walked away from the offer, and there are plenty of reasons why it should have walked away. Originally, the tender offer contained the provision that Kerkorian's group could walk away if Ford's price fell more than 10% below its close on May 8.

Well, it did. When Tracinda launched the tender offer on May 9, it offered a slight premium to the stock's May 8 closing price of $8.20. Since then, the stock has fallen 25% to Tuesday's close of $6.12.

The stock has fallen because of $4-a-gallon gas and the sluggish economy. And investors were obviously frustrated when the company said it no longer expects to return to profitability by 2009. The company is cutting production in North America for the rest of this year. One result, The Wall Street Journal suggested last week, was that Kerkorian might try to force the Ford family to cede control of the company. The family owns 3% of the stock but controls 40% of the company .

Nobody is happy in the auto biz. How could they be? General Motors, which closed up 2% to $16.81 on Tuesday, is reportedly losing $1 billion a month. The market capitalization of its common stock is $9.5 billion. By comparison, the market cap of embattled Internet comapny Yahoo is $36 billion. (On the other hand, Barron's hasn't retracted its option that GM shares are worth owning.)

Meanwhile, Chrysler CEO Robert Nardelli said today that "it is hard to say" if Cerberus Capital Management would have bought the auto maker if it had known how tough the business would become.

But he added that neither Cerberus nor its backers are "second guessing. They're not looking back."

In fact, at a conference Tuesday sponsored by The Wall Street Journal, he told CNBC that he believes Chrysler will still be an independent car company three years from now, making smaller cars (and Jeeps) and building a presence in China and maybe India.

He'll need some luck -- a whole lot of luck.

Related reading:

Why Kerkorian is at it again

A lesson for GM and Ford: Chrysler cuts its throat

Toyota is slipping, Consumer Reports says

Ex-Home Depot chief to steer Chrysler

Comments

 

I agree with Charles it's the Manufactors (ford GM) and UAW.Lets see what good products have they put out there F150,250,350 Escalade Hummer What market are they after and cars do they make any car you see on the road maybe the fogus and now they wonder why no one is buying there products. Ford makes Jag and Vovo but have you driven one since they owned one Crap.UAW those creedy boys are only looking to protect what they get from each members check.Chrysler

I worked at a dealer and the quality of the cars was very bad. I know every car line has problems but it was amazing how bad the workmanship is. As for me I'll stick to German at least I get where I'm going and my service is included in cost of car gas milage is good to

The housing mess, the energy mess, food prices, and the collapse of the auto industry are all part of the same problem.  Housing had lenders making loans with little or no regard to the debtors ability to repay and Fannie Mae and Freddie Mac just fueled the foolishness by creating a market for these loans, despite their own advisors advocating (in muted bureaucratic fashion) against it.  We have no "energy policy" to speak of, and instead of focusing on conservation, public transit, better planned cities and work locations, we built bigger and bigger SUV's and more and more roads and sprawl.  Then, the government pushes and subsidizes net energy loss programs like ethanol, instead of focusing on truly renewable energy sources like the sun, windpower, geothermal (and conservation as an overriding policy) and now we have corn shortages driving up the price of basic foods, along with ever increasing costs of oil fuels being used to transport stuff to urban areas that sprawl everywhere.  Now we have an auto industry that largely builds crap (not necessarily in the it looks good department, but in the functionality department and in the energy consumption department - and it is largely due to our own stupidity in being so easily manipulated into wanting the vehicles that make the manufacturers the bigger profits and consume so much fuel) and they can't retool fast enough.  And finally, instead of stepping back and re-evaluating all that has gone wrong and the reasons therefore, we have a bunch of people who continue to advocate for more drilling, to find more oil, that will damage more natural areas and otherwise counter balance the increase of CO2, so that we can continue to have stupidly wasteful vehicles and a "comfortable" self absorbant egocentric lifestyle - one that has our military fighting largely unnecessary wars at the cost of 12 billion each month.  

This country is going to hell in a hand-basket.  Nevermind the medical and health care crises that is becoming ever more costly at double digit rates every year.  Forget about a social security system that is a train wreck just waiting to happen, and the fact that our tax system is stretched to the breaking point.  The lack of meaningful leadership and our own greed, stupidy, selfishness, and shortsightedness - and not the terrorists or whatever other boggy men we wish to set up to blame for our ailments and who are largely themselves in existence in response to our actions and inactions -  are the real problem.  Rome fell despite its power, and the U.S. and our way of life will surely fall just as well.  We are seeing it now, and within another generation, or two at most, the process will have succeeded in turning the U.S. into a has been second rate country, largely owned by foreign companies and banks, with a lifestyle and life quality that will be a shadow of what we had, and what we could have continued to have, if not for the self-destructive behavior being engaged in.          

It seems that many posters don't seem to remember/understand that it has been the gov't that has allowed the cry-baby capitalists to get away with not improving MPG for many decades.   They claimed it was not possible without loss of jobs, so the shortsighted gov't believed the bull-*** and relented (By using profits to lobby and buy support).  This was a combo deal, benefiting the oil industry as well.   Now US automakers are so weak, CEO's are paid more and research and development gets less.   I guess the gov't will be forced, in the name of US jobs, to bail-out (by further debt to China) another unchecked "Sapitalist" (Socialized capitalism.  Not a word found on wiki, so I guess it is mine).  The US experience has proven the ultimate failure that is capitalism, its purity, contaminated by greedy little/big pigs and ongoing whining to secure their place at the public teat.              

Elect GREEN Politicians!!!    Are their any...? aaaah  Democrats!!!! or Independents!!!

Back in 1953 my 1951 chevvy got 21 miles to gallon on highway at 55mph. That's over 50 years ago, and to this day, a lot of cars are still just in the teens in mpg.------------------------------You would think that by now all cars would be 40-50 mpg,

some even in the 60's .

look at the MPG of the early 80's honda civics, VW rabits, etc... they were well into the 50's for mpg.  how in the last 2 decades have we gone backwards????  because of cheap fuel and people driving 17mpg suvs to work alone!!  the fuelishness is over (no pun intended) i'm currently looking at mororcycles and i'm not even impressed with their MPG.  better than cars but not by much considering the weight difference.  maybe in 5 years we will all be driving street legal scooters that get 100mpg but we'll still have to watch out for the soccer mom on her cell phone in the ford excursion not paying attention to the road.

Billy, the EPA's testing is different now, with more realistic today than back then.

The real problem for Detroit is the American consumer. When gas is cheap, Americans want SUV's, big sedans with lots of Horsepower. Ford for years had to give Escorts away at cost or below, because of the CAFE requirements and the consumers did n't want to buy them.

The reason why Americans don't like American cars is because names like Buick, Mecrury, GMC trucks, Caddie, most Chysler products just do not connect with the youth of America.  To them they do not even know what a Buick is!  They are the big cars that their Grand Pops drove.  They want a Honda Civic or a Scion.  GM, Ford and Chysler are dead in America.  They will go away.  So will Sears, Kmart and Penneys.  They are all old and in the way.

Blacksheep got it about right,it's due to all these Harvard and Duke greedy types that have screwed these companies up with no end in sight.For years they have been run by the wrong people in senior management and rubberstamp boards of directors.They consistentently if not deliberately miss their markets(a huge positive for foreign competitors).On the UAW side there were 586K at GM alone in the late 70's today it is now near 50K.So for the past 30 years the UAW has handed GM corporate executives concessions of nearly 530K jobs lost due to mismanagement and missed markets.The 30+ year old mantra of placing blame on the UAW for the big three's problems no longer applies and in the future they will face critical experience shortages that they cannot easily replace. The reason why some products are more crappy than others is due to the fact that todays engineers are dependent on software and computers and far less on brain power like it used to be years ago.The UAW does not and has never had any say in products or production methods beyond safety issues so they can only build what they are given from GM management.If the product is engineered well it will no doubt be built well,if not then it will only be built as well as it can be engineered.Instead of being in denial on poor products of the past the big three should have made free long term extended warranties available,but the management got arrogant and greedy with big vehicles.While they were greedy they totally ignored other important sectors of the market.This is a long dated proven and repeated cycle of past managements and this is why they are failing.

Dave makes an excellent point about Toyota. Their truck sales (which includes SUVs) are down 7% through May, and their auto sales are down 0.9%.

Fact is, however, almost no one is showing gains on truck/SUV sales. The exceptions: Porsche, Mazda and Suzuki.

Send a Comment

Comments must be directly related to the blog entry. Comments with offensive language will be deleted. Your e-mail address won't be displayed.

(please, no HTML tags. Web addresses will be hyperlinked):