Things are looking pretty grim, folks. Just grabbed this from the Bloomberg wires:
Sept. 29 (Bloomberg) — Ford Motor Co. will be forced to file for chapter 11 bankruptcy protection after months of declining revenue several senior executives with the company confirmed today. Ford (stock symbol – F) has seen profits enter a tailspin that eventually led management to conclude that there was no alternative to declaring bankruptcy after losing 8.6 billion dollars in the second quarter.
Still, the announcement stunned many on Wall Street, who expressed shock that the 20 billion dollars Ford reported as cash on hand in August was not enough to see it through the downturn. Indeed, earlier predictions by senior executives with the company that Ford had enough cash on hand to weather the credit crisis fell victim to a steep decline in sales, coupled with a sharp increased in operating costs. Many people familiar with the company’s financial situation expressed alarm at how rapidly sales plummeted in quarter 4 and realized that their chances of avoiding bankruptcy were slim. “We saw the handwriting on the wall,” said one Ford executive who refused to be identified. “It was either declare now and aggressively restructure while the rest of the economy is hurting, or run the bad odds and not be in a strong position when the market improves. You can’t fight the math. We just thought this was the only way.” The executive added that Ford had found it impossible to secure credit, something seen as essential for Ford to return to profitability.
Ford has undergone intensive efforts to raise capital and keep it’s credit rating in recent months, even going so far as to mortgage its trademark for its ubiquitous blue logo, but the efforts were not enough. Its shares were down 13% in trading on Monday, amid a day of heavy losses for Wall Street.
It was not immediately clear what effect the declaration of bankruptcy would have on Ford’s employees. Efforts to reach Ford CEO Henry Ford Jr. were unsusccessful Tuesday afternoon.