Execs won't say when next profit is

                   expected; analysts frustrated

                   January 18, 2002

                   BY JAMIE BUTTERS

                   DETROIT FREE PRESS BUSINESS WRITER

                   Ford Motor Co. reported its worst financial

                   performance since 1992 on Thursday, booking a

                   widely expected, though still enormous, loss of $5.5

                   billion for 2001. The automaker lost almost $800

                   million on day-to-day operations and more than

                   $4.6 billion trying to fix past mistakes.

                   Expensive plant closings, bad bets on precious

                   metals and the replacement of millions of potentially

                   faulty tires produced the loss, an extreme about-face

                   from the Dearborn automaker's profits of $3.5

                   billion in 2000. The company expects to break even

                   this year.

                   Most of the damage was done in the final three

                   months of 2001, when Ford lost $860 million on

                   regular business and took a $4.1-billion charge as

                   part of a sweeping plan that includes closing at least

                   five plants and eliminating 35,000 jobs worldwide

                   over several years. Another $102-million charge to

                   account for some financial investments brought the

                   fourth-quarter loss to $5.1 billion.

                   That was the worst three-month result since the first

                   quarter of 1992, when an accounting change

                   produced a loss on paper of $6.7 billion.

                   That year was also the last time that Ford lost

                   money on a calendar-year basis: $7.4 billion. Aside

                   from onetime items that year, Ford lost only about

                   $502 million.

                   Total revenues in 2001 were $162.4 billion, down 5

                   percent from $170.1 billion in 2000. Revenues at

                   rival General Motors Corp. were down 3 percent.

                   The dismal results reported Thursday were not a

                   surprise. Ford's top executives detailed what they

                   called their revitalization plan -- including the

                   onetime charges -- to Wall Street experts,

                   journalists and employees last Friday.

                   The outlook for this year is more uncertain.

                   The plan is to break even this year, after losing

                   money in the first quarter, Chief Financial Officer

                   Martin Inglis said Thursday.

                   Earlier in the week, analysts were projecting Ford to

                   earn 29 cents a share -- about $500 million -- for

                   the year.

                   Inglis declined to give any further guidance, such as

                   when the company would turn a profit again, which

                   frustrates some analysts.

                   Companies typically promise a specific level of

                   performance each quarter, but Ford has not done

                   so, even in presenting its turnaround plan.

                   "The whole plan is very flaky," said Saul Rubin of

                   UBS Warburg. "There's no guidance for Ford

                   Credit. There's no guidance for North America.

                   There's no guidance for Ford of Europe. There's

                   just no guidance."

                   Analyst John Casesa of Merrill Lynch, who calls

                   the turnaround plan "comprehensive and credible,"

                   lowered his 2002 outlook for Ford this week from a

                   profit of $500 million to a loss of $350 million.

                   Rubin noted that the quarterly results did have one

                   piece of unexpected good news: Ford improved its

                   cash position in the fourth quarter by about $800

                   million.

                   That should help reduce the likelihood of further

                   credit-ratings cuts, at least for the time being.

                   Further bolstering the company's balance sheet are

                   attempts to sell three non-essential businesses,

                   including a chain of junkyards, for $1 billion and an

                   effort to raise $3 billion selling new securities.

                   Inglis is in New York this week on a so-called road

                   show to explain the risks, opportunities and

                   mechanics of the company's new securities to Wall

                   Street analysts.

                   The new securities act like preferred stock or a

                   bond -- regular dividends, but no vote -- except that

                   they can be exchanged for common stock any time

                   before 2032.

                   Ford wouldn't have needed to spend the time and

                   money on this offering if it had retained more of the

                   cash it had in hand just a few years ago.

                   Ford gave its shareholders the equivalent of $47

                   billion over the last five years through regular and

                   special dividends, spinoffs and stock buybacks.

                   Inglis said the current offering is an efficient way to

                   raise funds, but he acknowledged that in retrospect

                   it would have been better to keep more cash "if we

                   had recognized the amount of issues we had within

                   Ford."

                   But giving money to shareholders was the least of

                   Ford's worries this year.

                   It made a $1-billion mistake buying a large amount

                   of palladium -- a precious metal used in catalytic

                   converters -- when prices peaked above $1,000 an

                   ounce. Soon afterward, the company cut its reliance

                   on the material, and its price plunged to about $400

                   an ounce.

                   Closing five plants will cost the company about $3

                   billion in accelerated depreciation. The company

                   never needed as many plants as it had in North

                   America, Chief Operating Officer Nick Scheele has

                   said. Why did it have so many plants? "I have no

                   idea," he said this week.

                   Profits at financing arm Ford Credit fell by 22

                   percent to $1.2 billion for the year. The fall was due

                   to the company setting aside more money to cover

                   loans that go bad when customers default or file

                   bankruptcy.

                   Contact JAMIE BUTTERS at 313-222-8775 or

                   butters@freepress.com.