Ford is Revving...

Ford Motor Company reported their first North American Profit since 2005. Not only is this a positive step for the entire automobile industry, but it also signifies a positive change in Detroit's suffering economic situation. In addition to announcing a $997 million profit, the company also revised their forecast for 2011.

"All domestic automakers reported positive numbers last month, but Ford Motor became King of the Hill by producing the best-a one billion dollar profit.

The company saw sales of its Ford, Lincoln and Mercury vehicles shoot up 21% versus the month before and increased 3% versus a year ago. October is the third time in the last four months that Ford sales have increased.

The company reported that sales of the Ford Taurus up 141% versus a year ago and Ford Fusion were up 24%. Sales of Ford Mustang were up 2%, Lincoln MKZ sales were up 27%, and Ford Escape sales jumped 26%. The crossovers Ford Edge and Flex saw 38% and 8% sales increases, respectively."

Ford also gained market share for the third straight month, and now has 21% of the total light-vehicle market. Comparatively, Toyota Motor Sales reported a 3.5% decrease in sales versus last October. "

Looking ahead, 2011 is going to be a pivotal year for Ford.

Balance sheet improvement is imperative for the company in the coming quarters. Fords revolving credit facility has extended the maturity from 2011 to 2013 in exchange for reducing lenders’ commitments and increasing interest margins and fees. Ford is seeking to raise additional capital with a convertible debt offering and an equity distribution plan. Its decision to raise another $3b from investors speaks to the need to fix the balance sheet. We feel like any other auto maker, it needs a consumer-led recovery that isn’t dependent on the government.

Ford expects to be solidly profitable by fiscal 2011, excluding special items, with positive operating cash flows. According to Reuters estimates, analysts are expecting a net profit of 3.768B for fiscal 2011.