Egan-Jones Ratings: Ford is Toast, Too
Egan-Jones Ratings is a relatively obscure little outfit out of Haverford, PA. It’s one of those companies whose website doesn’t have a flashy design or, for that matter, a phone number (just a contact form). Forbes rates them number 1 on their list of eight financial mavens (not ten!) “who saw the crisis coming.” “A vocal critic of rivals Moody’s, Fitch, and Standard & Poor’s, Egan has a track record of warning investors about poor credit quality long before the Big Three ratings agencies. Most recently he said to shun subprime-mortgage-backed bonds even while the other agencies said these were investment-grade credits.” And now Sean has a few words on Ford, via a ginormous Fordetorial in Bloomberg. ““It’s unrealistic of Alan [Mulally] to expect Ford to survive, let alone profit, when they’re experiencing a 30-plus percent decline in sales. Without a bankruptcy filing and a complete reorganization, Ford is not going to be profitable, period.” Egan ain’t kidding. His company rates Ford’s debt a D, its lowest level. And if that’s not enough blowback for Mulally-loving Fordophiles, here’s some more…
“The company may need a bailout to get to 2010, because for all Mulally has accomplished, it’s not enough, says Kevin Tynan, an auto analyst at New York-based Argus Research Corp. Mulally should have produced smaller cars faster and pushed for union concessions to take effect before 2010.
‘He played the cards he was dealt,’ Tynan says. ‘What you needed was someone who would throw back the cards and say, ‘This won’t work.’ You needed General Patton, somebody who is not going to accept this is how things are done. It was essentially a missed opportunity, maybe the last chance.'”
More by Robert Farago
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As they say in sports: "You're not as bad as they say but you're not as good as you believe." I think that Bloomberg overstates their case. Yes, Ford is in tough times, but like all the rest of the B&B has stated, so is everyone else. They will pull out of this much bruised but not broken. GM, OTOH, is in it verrry deep and I don't hold out a lot of hope. Only Ford is in the position to benefit from the misery of others. 2010 IS the key year after all.
I was in a Lincoln/mercury dealer today kicking tires. Gone is the town car, and the salesman showed me the two bread and butter cars. A Mazda 6 that has been reshaped into an mkz and a taurus (volvo) framed car reworked into an mks. The smaller one (mks) is priced low starting at 30K and offers awd. The bigger one mkz is a true 40-50K luxury car wannabe. The problem I told the salesman is that Huyndai has a $36-45K luxury crusier (genesis) that doesn't share any parts with any other Huyndai and it stands where the LS400 lexus did 18 years ago. The reviews fault the Huyndai for being less a road car than a Bimmer 5 series, or a mercedes E class and the new Jaguar. However, every one of those cars starts at $50 and goes to $75K. They said this genesis is at least as good as a lexus G series. All of this to point out, that while Ford is better, the target keeps moving and there is always someone (usually foreign) ready to take over a segement with an underpriced blockbuster line of cars. Go figure. Oh, the salesman said , who would pay that much for a Huyndai?