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MORGAN STANLEY: Ford's new CEO was not appointed to 'run a normal car company'


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https://finance.yahoo.com/news/morgan-stanley-fords-ceo-not-154119449.html

 

lots of assumputions here

 

 

The automaker will lower its earnings outlook. The bank believes Ford may reassess its strategic spending, which could cut earnings by as much 50% over the next 18 to 24 months.

Monetize strengths. Morgan Stanley thinks it would behoove the automaker to monetize core areas, specifically its F-Series of trucks, which the bank says could account for "over 100% of its global auto profit."

Transform the automaker into a tech company. The bank sees a huge potential in leveraging its nearly "2 billion vehicle miles traveled into a data harvesting, machine learning, and content delivering juggernaut."

Hackett needs to start swinging. If Ford is to restore its investors' confidence, the new CEO needs to affirm his commitment to digitalization right off the bat, according to Morgan Stanley

 

 

Edited by silvrsvt
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So Ford is listening to tech company gurus and even more of F Series profits to transform Ford

into a company that still relies on F Series to cover all the debts of being "fashionable".

 

IMO its the tech industry pushing the automotive business around at this time. The tech industry is running out of "space" to do things (traditional IT market is mature now and won't have the same growth rates it had the past 20 years or so) and are trying to expand their markets to keep shareholders happy.

 

There lots of smoke out there and some generational challenges to an extent that is changing the automotive landscape...IMO I think some of it is what you could call "Fake" news with certain facts being "trumped" up.

 

Toyota is even worried to a degree with the changes taking place in the marketplace. There isn't any strong trends that show where things are going and Automakers are nervous since they aren't the ones driving the changes.

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The tech industry is running out of "space" to do things

 

Which, of course, is a horrible shock to those who believe that the tech industry is somehow different from all others.

 

Every bit of that Morgan Stanley analysis is a reminder that 1999 was a long time ago for analysts in their early 30s.

 

Any analyst my age (or silvrsvt's age) or older who is pumping out bilge of this caliber should be forced to invest their life savings in accord with their loony predictions.

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One has to wonder if the auto industry is falling into the same trap that caught the political world off guard during the last election cycle. Too much emphasis on what the coasts want and not enough attention being paid to what is happening in the heartland. It may sound all rosy and hip to cater to the urban lifestyle but the truth is that the hinterlands are where the bills get paid. In other words, don't assume that electric, self driving cars for the big cities are going to be your savior when trucks and SUVs for the fly-over states still sell in far greater numbers and are grossly more profitable.

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Once upon a time, I thought that the first four letters of analyst explained where they got their conclusions.

Now I know it's true:

Morgan Stanley thinks it would behoove the automaker to monetize core areas, specifically its F-Series of trucks, which the bank says could account for "over 100% of its global auto profit."

How can one product be responsible for "over 100%" of any profit? How can you get "over 100%" of profit at all?

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Now I know it's true:

How can one product be responsible for "over 100%" of any profit? How can you get "over 100%" of profit at all?

If all other vehicles lose money, then the profit for the F150 is greater than the profit for the company.
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One has to wonder if the auto industry is falling into the same trap that caught the political world off guard during the last election cycle. Too much emphasis on what the coasts want and not enough attention being paid to what is happening in the heartland. It may sound all rosy and hip to cater to the urban lifestyle but the truth is that the hinterlands are where the bills get paid. In other words, don't assume that electric, self driving cars for the big cities are going to be your savior when trucks and SUVs for the fly-over states still sell in far greater numbers and are grossly more profitable.

I read that during the Depression, telco customers were dropping service because of the cost. GTE (now part of what is Verizon) would've gone bankrupt except for the "fly-over country" customers. Not like they were necessarily better off, but simply relied upon phones due to their rural locations.

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If all other vehicles lose money, then the profit for the F150 is greater than the profit for the company.

That's the point, all other vehicles don't lose money but what we regularly see is those pesky

up front costs for product cycles and recalls arriving and masking sheer profits from vehicles

 

I think that Trucks, Vans and Utilities make the majority of the cash, Fiesta, Focus and Fusion not so much

 

How can one product be responsible for "over 100%" of any profit? How can you get "over 100%" of profit at all?

He's also ignoring Profits from Europe and China/Asia Pacific where F Trucks are not a factor.

 

If all those other vehicles were loss makers, Mulally would have 86ed all of them.

Edited by jpd80
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They also don't take into scale that parts become cheaper even for the expensive vehicles because of the cheap ones. If I place an order for 10 million parts vs 5 million parts, I will get a better price for ordering 10 million.

This is the issue I have with analysts, In college they couldn't cut it in the industry they really wanted to work in, they look good on paper and know enough so that people at consulting firm hire them as they look good on paper and then say you need to make decisions about an industry that you couldn't get into in the first place. Then the outside consulting firm sends in a hot sales person to a person that hasn't been laid in 5 years, flirts with the main decision maker gives them a 5 million dollar contract to a hot sales person because they are getting attention from an attractive person and end up with an industry drop out.

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Hackett needs to start swinging. If Ford is to restore its investors' confidence, the new CEO needs to affirm his commitment to digitalization right off the bat, according to Morgan Stanley

 

 

Hackett needs to do that quickly and consistently. Ford has the potential to be a player in the future of the transportation and mobility industry. It needs good management to make that happen. Hopefully Hackett has what it takes.

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Hackett needs to do that quickly and consistently. Ford has the potential to be a player in the future of the transportation and mobility industry. It needs good management to make that happen. Hopefully Hackett has what it takes.

 

The issue is that it makes no sense to sacrifice the F-series to do that.

 

All this talk of digitalization and mobility is being driven by the tech industry without really any regard to the real world/market.

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The issue is that it makes no sense to sacrifice the F-series to do that.

 

The Morgan Stanley analysts say Ford can strengthen profits that come from F-Series. I think that's what they mean by "Monetize strengths".

 

I looked up the word monetize in AED. The definition is "give legal value to or establish as the legal tender of a country".

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To the extent that Fields undermined the product plan and product cycle, Ford may well have some short term problems.

 

What concerns me most is that there appears to be some fire with all of this smoke from the media - it's still an open question as to just how weak Ford's plans were under Fields, but I don't think there is any question at this point that he was not a good leader and hurt Ford's forward progress.

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Since there seems to be an awful lot of emphasis on F-150 profits does this pose any threat to the future of other products like the Ranger which could pirate some F-150 sales? I sure hope not or Ford has sold me their last vehicle.

 

 

I think the bigger concern right now is the possible shitshow that might kick off with Saudi Arabia and its allies vs Turkey/Iran in Quatar...that will put a major damper on CUV and Truck sales with gas spiking to $5 bucks a gallon on average.

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The Morgan Stanley analysts say Ford can strengthen profits that come from F-Series. I think that's what they mean by "Monetize strengths".

 

I looked up the word monetize in AED. The definition is "give legal value to or establish as the legal tender of a country".

 

Monetize frequently means "turn into money", as in "turn the F-Series into money" as in "spin off the F-Series"

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If all other vehicles lose money, then the profit for the F150 is greater than the profit for the company.

 

But they don't.

 

Morgan Stanley is, as per usual for analysts, conflating gross profit with net profit, wherein the *gross profit* on the F150 is undoubtedly greater than the net profit of Ford Motor's global organization, but that's because you're taking revenue minus cost of goods sold: You're not including the amortization of tooling and physical plant, the cost of incentives, the F-Series' share of general administrative costs (such as pensions and retiree health care), and other assorted costs.

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