Billionaire investor Kerkorian dumps remaining Ford shares

Billionaire investor Kirk Kerkorian has sold off all of his remaining shares of Ford Motor Co (F.N), a spokeswoman for his investment firm, Tracinda Corp, said on Monday.

Tracinda, which briefly ranked as Ford's largest outside investor earlier this year, said in a regulatory filing in October that it had begun working with bankers to sell the 133.5 million shares of the No. 2 U.S. automaker it still held at that time.

It was not immediately clear when Tracinda had completed those remaining sales of Ford stock.

Kerkorian's final pullout from Ford completed a costly retreat for the activist investor, who has a mixed track record with investments at all three Detroit-based automakers.

A spokesman for Ford could not immediately be reached for comment.

Kerkorian, 91, previously held a nearly 10-percent stake in General Motors Corp (GM.N) and made a failed bid for Chrysler LLC last year.

He surprised analysts and investors in April when he began buying Ford shares and spent over $1 billion to take a stake in Ford at an average price per share of $7.10.

At its peak, Kerkorian held a 6.5 percent stake in Ford and had offered in June to support the automaker's turnaround efforts with an infusion of additional capital.

Ford has been widely considered to be the best-positioned of the three Detroit automakers at a time when all three have been hit hard by declining sales and tight credit.

When GM and Chrysler negotiated $17.4 billion of emergency loans from the U.S. government earlier this month, Ford held back, saying it expected to be able to weather the downturn on its own.

But conditions across the auto industry have taken a dramatic turn for the worse since September when credit suddenly tightened for both car shoppers and dealers.

In late October, Tracinda began selling Ford shares at $2.43, representing a loss of almost 66 percent from what the fund paid on average.

Since then, Ford's shares have traded between a low of $1.02 in November to a high of $3.54 earlier this month.

Ford shares fell almost 5 percent in trading on Monday to $2.18.

The Ford family holds just under 3 percent of the automaker's shares but controls 40 percent of the voting power through a separate class of shares.

Kerkorian's offer of additional capital for Ford had been seen as an endorsement of the company's strategy and management under Chief Executive Alan Mulally.

But Kerkorian's record as an activist investor had also raised questions earlier this year about whether his investment could be a threat to the Ford family's continued control of the automaker.

Car dealers get creative as brethren shutter shopsStory Highlights

A newspaper advertisement for a Miami car dealership reads more like a coupon for bags of potato chips: "Buy one, get two!"

The ad speaks to the desperation of car dealers as Big Three auto manufacturers beg Washington for billions in bailout dollars to combat sales that keep dipping to all-time lows.

"The first thing people think when they come in is, 'It's a fake ad. It's a normal car dealer ad. It's a gimmick.' But it's not," said Ali Ahmed, sales manager at Rob Lambdin's University Dodge in Miami.

Get a new car or truck at 75% off

To be fair, there is a catch to the buy-one-get-one-free offer: You must first buy a new Dodge truck at full retail price before you're eligible to receive a second truck for about $3,000 in tax, tags and dealer fees.

"We've been fielding phone calls and e-mail inquiries from every state in the country looking to get this buy-one-get-one deal," Ahmed said.

About 700 dealerships, most of them selling cars from U.S. automakers, have shut their doors since the beginning of the year. The number is expected to hit 900 by year's end.

Last month, National Automobile Dealers Association Chairwoman Annette Sykora told the House Financial Services Committee some 19,700 dealerships will still be around by the end of 2008, compared with 50,000 in the 1940s.

Auto sales are at a 15-year low, she said, which affects more than the Big Three automakers. Dealers are slashing personnel and expenses. Sykora herself has had to cut staff by about 20 percent at her dealerships, she said. iReport.com: Ask the automakers your questions

Sykora, a third-generation car saleswoman who sells Big Three automobiles at dealerships in Slaton and Levelland, Texas, said she recently sat down with the superintendent of Slaton schools.

"We started discussing what would happen if the dealerships in my hometown were to close," she said during her November 19 testimony. "The loss of tax revenue would force them to cut programs and teachers.




"Many displaced dealership families might have to leave town in search of work in other places, compounding the loss. This same scene would play out in hundreds of communities in the U.S."

Dealerships, Sykora explained, are independent businesses, not arms of the automakers. They invest in land, equipment, buildings and take out millions of dollars in loans to put the vehicles on their lots and showroom floors.

She also said car dealerships are a prime source of advertising revenue for local media, they support charities and Little League teams and they are integral to the tax base, she said.

"One-fifth of the nation's retail purchases are automobiles. By getting automotive retailing back on track, Congress can effectively leverage the economic engine of the automobile industry to get this economy running on all cylinders again," she said, pleading with Congress not to let the Big Three file for bankruptcy.

With the world's economy reeling, expensive items like cars are not high priorities for families and businesses. It doesn't help that the credit crunch is making it difficult to get loans, which the majority of U.S. consumers need to purchase vehicles.

Also compounding matters is consumer confidence, which hit an all-time low in October and didn't improve much in November, according to the nonprofit Conference Board, which maintains indices on consumers' trust in the marketplace.

According to Autodata, car sales have plummeted since last year. In the United States, the number of sales of passenger cars and light trucks in November 2008 was down 36.7 percent from November 2007 -- from about 1.18 million to 747,000.

Also, as of November 2008, automakers had sold about 12.35 million cars and light trucks, compared with 14.76 million during the same time period last year -- a drop of 16.3 percent, according to Autodata's summary of U.S. light vehicle retail sales.

Comparing November 2008 sales with those in November 2007, Autodata reported that General Motors saw a 41.3 percent drop, Ford a 30.5 percent drop and Chrysler 47.1 percent.

But it's not just U.S. automakers taking a hit: Toyota's vehicle sales declined 33.9 percent, Honda's dipped 31.6 percent and Nissan's dropped 42.2 percent during that time period, Autodata reported.

"It's definitely a tough climate right now," said Matt Lee, floor manager for Major World Auto in New York. "A lot of people are saying it's a perfect storm of gas prices and financing and consumer confidence."

Major World Auto used to sell about 150 cars a month. It now sells about half that, Lee said. And of the 15 to 20 salespeople who used to roam the salesroom floor, about 10 are left, he said.

"Salesmen actually just walked out because they're not making enough money to support their family," he said.

Major World has stopped bringing in new models because it can't sell the cars it has. Like University Dodge in Miami, it is resorting to some creative sales pitches, including zero-percent financing for 72 months and rebates of up to $7,500.

But even with the bargains, car dealers are having trouble getting customers into the showrooms. In a recent CNN visit to Major World, which lasted about two hours, only one customer walked onto the lot -- to browse.

"Where you would see five people a day coming in to at least look at a car per salesmen, you're getting maybe one person a day or two people a day," salesman Jamie Krinsky said.

If the Big Three file for bankruptcy, Sykora told Congress last month, sales and confidence will continue to plummet.

"Imagine how banks would react to a dealer who has asked for millions of dollars to finance new and used inventories from an automaker going through 'reorganization,' " she said.

The government can help boost auto sales in many ways, Sykora said, citing two proposed tax incentives: one that would make interest payments on car loans tax deductible and another that would encourage consumers to upgrade their older cars for more fuel-efficient models. "Cash for clunkers" programs are in place in Texas and California, she said.

"Whether it's my dealerships in Texas or it's the dealership in your community, the fact is local dealerships will be a major factor in our economic recovery," she told the House committee. "To get the economy back on track, we must restore consumer demand, and the only way to do that is to restore consumer confidence."

Automakers back to try to sell Congress on rescue

U.S. automakers are returning to Congress for high-stakes hearings they hope will persuade skeptical lawmakers to save their troubled industry with $34 billion in emergency aid, but a top Senate Democrat wants to hand their problem to the Federal Reserve.

Two weeks after a botched attempt on Capitol Hill, repentant leaders of General Motors Corp., Ford Motor Co. and Chrysler LLC were appealing to the Senate Banking Committee on Thursday with three separate survival plans that include massive restructuring, the ditching of corporate jets and vows by CEOs to work for $1 a year.

But they could expect a chilly reception on Capitol Hill. Even a top Democrat in charge of evaluating their aid requests made it clear he was eager to avoid voting on a bailout. Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee, wrote to Federal Reserve Chairman Ben Bernanke on Wednesday asking the central bank chief whether there was anything stopping him from using his considerable lending authority to help the automakers.

And Senate Majority Leader Harry Reid, D-Nev., said it was up to the Bush administration to unilaterally rescue the Big Three with loans drawn from the $700 billion Wall Street rescue fund, since Congress was still unwilling to do so. "I just don't think we have the votes to do that now," he told The Associated Press.

Dodd's committee was hearing testimony on the companies' plans from GM CEO Rick Wagoner, Ford CEO Alan Mulally, Chrysler CEO Bob Nardelli, UAW president Ron Gettelfinger and the head of the Government Accountability Office. The House Financial Services Committee was to hold a similar session on Friday.

Automakers were trying to make the case that the billions in loans would be a bridge to survival and profitability.

In the streets outside the Capitol, all three companies were showcasing their futuristic, green models in hopes of counteracting their image as purveyors of gas-guzzling SUVs. Wagoner planned to drive to the hearing in a test version of the Chevrolet Volt, an extended-range electric vehicle expected to go on sale in 2010.

Reid and House Speaker Nancy Pelosi, D-Calif., said the hearings would help determine whether Congress would consider a massive aid package for the industry in a special session next week. Critics say the companies have been poorly managed and failed to show they won't be back for another government rescue.

The Big Three are struggling to stay afloat heading into 2009 during an economic recession, a steep decline in sales and a tight credit market. The three companies burned through nearly $18 billion in cash reserves during the last quarter.

Chrysler said it needed $7 billion by year's end to keep operating. GM asked for an immediate $4 billion as the first installment of a $12 billion loan, plus a $6 billion line of credit to use if economic conditions deteriorate. Both said in plans submitted to Congress that they could drag the entire industry down if they fail. Ford requested a $9 billion "standby line of credit" in case one of its Detroit competitors fails.

Wagoner and Mulally both say said they'll work for $1 a year -- a move Chrysler's Nardelli has already made -- if their firms accept government loans. All three plans envision the government getting a stake in the auto companies that would allow taxpayers to share in future gains if they recover.

In Detroit, the United Auto Workers union said it would delay the three companies' payments to a multibillion-dollar, union-run health care trust and essentially end a jobs bank program in which laid-off workers are paid most of their salaries. They also decided to let the Detroit leadership begin renegotiating elements of landmark contracts signed last year, a move that could lead to wage concessions.

The companies, union officials and car dealers were lobbying feverishly for the loans, arguing that the collapse of one or more of the Detroit carmakers would throttle the already weakened U.S. economy and jeopardize the nation's manufacturing sector.

Yet the bailout remains unpopular with the public. Sixty-one percent oppose providing the auto companies with billions in federal assistance, according to a CNN-Opinion Research Corp. poll released on Wednesday. Fifty-three percent said it would not help the country's economy.

The auto executives were roundly criticized for taking corporate jets to the hearings last month and this time made the 520-mile trip to Washington aboard hybrid cars. Underscoring the different approach, Wagoner and GM officials ate lunch Wednesday at Quiznos at a Pennsylvania rest stop along the way.

Ford announces $129M 3Q loss

Ford Motor Co. says it lost $129 million in the third quarter as the struggling automaker burned through $7.7 billion in cash.

The automaker also said Friday it will cut about 2,260 more white-collar employees in North America as it tries to weather the worst economic downturn in decades.

Ford says it lost 6 cents per share for the quarter, compared with a loss of $380 million, or 19 cents per share, a year ago.

The company posted a pretax loss of $2.7 billion from continuing operations. But it was offset partly by a $2 billion gain as the company shifted retiree health care liabilities to a trust run by the United Auto Workers.

Sales fell 22 percent to $32.1 billion from $41.1 billion due to lower volume and the sale of Jaguar and Land Rover.

Excluding special items, Ford lost $1.31 per share, worse than Wall Street expected. Analysts surveyed by Thomson Reuters predicted a loss of 94 cents per share on sales of $28 billion.

Dearborn-based Ford reported its worst three-month performance ever in the second quarter, when it lost nearly $8.7 billion.

The cash burn — in which a company spends more money than it takes in — was far higher than the $2.1 billion it burned through in the second quarter.

Ford said the cash burn primarily reflected pretax automotive losses, changes in working capital and payments to its credit arm to reduce interest rates for buyers. It was exacerbated by sales drops and production cuts of 500,000 fewer vehicles from second-quarter levels, resulting in $3 billion less in incoming cash for the quarter.

Chief Financial Officer Lewis Booth would not say if he expects the cash burn rate will continue at the present levels.

"With our present assumptions, we are comfortable with our liquidity position," Booth told reporters Friday morning. "I think it goes without saying, forecasting the future at the moment is extremely difficult. Trying to find out just exactly what is happening with the consumer is really tough."

Industry analysts say that if the economy doesn't improve, Ford could run out of money sometime after 2010.

U.S. automakers have approached the U.S. government for low-interest loans as they try to weather the global economic slowdown.

Ford is among automakers that are talking with the European Commission for a 40 billion euro low-interest loan. It also is talking to other governments.

Ford said it will cut North American production in the fourth quarter by 40,000 units more than what was announced in September, primarily with shift reductions and temporary plant shutdowns. In September, the company announced a fourth-quarter production cut of 171,000 units over the fourth quarter of last year, mainly in trucks.

The salaried cuts, Ford said, equate to about 10 percent of its North American salaried work force of 22,600.

It also said that it has no plans to offer more buyout or early retirement packages to blue-collar workers.

Ford announced that some of its vehicle programs will be deferred, although the company described the moves as minor timing changes.