Ford Sees Red Ink for 2009
Ford Motor is feeling the squeeze as pickup trucks and SUVs go out of vogue because of soaring gas prices. The automaker said yesterday it's extremely unlikely it can return to profitability in 2009. Ford said it would cut back truck and SUV production by up to 40 percent in the second half of this year, compared with a year earlier. Just a month ago, Ford had said it would make money next year. Full-size pickup sales fell 15 percent in the first quarter, and sales of full-size SUVs were down 28 percent. Billionaire investor Kirk Kerkorian's offer to buy up to 20 million Ford shares at $8.50 apiece is suddenly looking more attractive, as Ford shares dropped by 8 percent, to $7.16, Thursday.
Rick Newman of U.S. News wrote about why small cars are a smart buy.
GM Says Strike Cost $1.8 Billion
General Motors said today that a strike at supplier American Axle & Manufacturing Holdings would cost the automaker $1.8 billion in the second quarter. Members of the United Auto Workers voted Thursday to end the nearly 11-week strike, which sidelined 3,650 workers and hampered production of pickups and SUVs at several GM plants. GM said second-quarter production would drop by 230,000 vehicles because of the work stoppage. The carmaker also said it contributed $215 million to help bring an end to the strike.
Gap's Cuts Pay Off
Gap Inc. saw a 40 percent jump in profits in its fiscal first quarter, the company says, through tightly managing costs and controlling inventory. However, revenue in the three months that ended May 3 dropped 4.6 percent, to $3.3 billion. The San Francisco-based clothing retailer, America's largest, also said it will reconfigure its store locations. Gap will close more stores this fiscal year than it had planned—about 115 instead of just 15. But it said it would open about 115 in new locations.
Kimberly Palmer reports behind the scenes at Gap and other retailers.
Yahoo Postpones Annual Meeting
Faced with a proxy fight with billionaire investor Carl Icahn, Internet giant Yahoo announced Thursday the postponement of its annual meeting from July 3 to sometime near the end of July. It said regulators first need to look over the proxy materials. Yahoo also said its board would shrink from 10 members to nine with the resignation of Edward Kozel, a venture capitalist who has been on the board since 2000. Kozel had planned to step down in February but delayed his departure to help evaluate a Microsoft takeover bid, which Yahoo rejected earlier this month. That decision prompted Icahn to launch the proxy fight.
Dollar Keeps Declining
In its third straight week of declines against the euro, the dollar traded at $1.57 per euro early this morning. Analysts say the dollar could decline to $1.60 per euro by midyear. The greenback has fallen 14 percent in the past 12 months against the European currency, as the Federal Reserve has cut short-term interest rates to 2 percent to try to perk up a U.S. economy bedeviled by high oil prices, sluggish home sales, and an overall slowdown.
Rick Newman explains why gas prices rise as the dollar falls.