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GM and Ford Burning Cash, Seek Emergency Government Loans
Contrarian Profits (November 10th, 2008) Writes:
America’s two leading auto manufacturers, Ford Motor Co. (F) and General Motors Corp. (GM), reported heavy third-quarter losses Friday and are under a severe liquidity strain. Both are seeking emergency loans from governments in the United States and Europe.
Ford posted a $2.98 billion operating loss for the quarter ended Sept. 30. Revenue fell 22% to $32.1 billion, forcing the Dearborn, Mich.-based automotive icon to burn through $7.7 billion in cash.
The automaker’s cash reserves dropped from $26.6 billion at the end of the second quarter to $18.9 billion at the end of September. If the company continues to burn cash at this rate, Ford will run out of money by April 2009.
“Cash burn is the No. 1 issue,” Rebecca Lindland, an analyst at IHS Global Insight Inc., said in an interview with Bloomberg Television. “We associate cash burn with General Motors. It has not
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