Future Shock: Ford Optimistic, Toyota Forecasts Gloom

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In this March 30, 2008 file photo, the company logo shines off the grille of an unsold 2008 Yaris at a Toyota dealership in Boulder, Colo.. Toyota Motor Corp., the world's second-biggest automaker by annual vehicle sales, is raising its prices on some U.S. models later this month amid increased worries about its profit growth in the American market, the company said Wednesday, May 7, 2008. (AP Photo/David Zalubowski, file) (David Zalubowski - AP)

Toyota Motor Corporation President Katsuaki Watanabe speaks during a press conference in Tokyo, Japan, Thursday, May 8, 2008. Toyota's profit for the fiscal fourth quarter dropped 28 percent from the previous year as a strengthening yen and lagging North American sales chipped away at the Japanese automaker's earnings. "We are facing a severe business environment," Watanabe said. "Toyota considers this headwind as a valuable opportunity to turn it into a more flexible and stronger company." (AP Photo/Shizuo Kambayashi) (Shizuo Kambayashi - AP)

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Mizuho Securities downgraded Toyota shares yesterday. Merrill Lynch, on the other hand, assesses Toyota's 2009 prognosis as too gloomy: "The objective of this forecast is most likely to whip up a sense of crisis internally, solidify the earnings structure and avoid negative effects on price negotiations with suppliers," Merrill Lynch wrote in an investor's note yesterday.

Ford, on the other hand, had something unusual to talk about at the company's annual shareholders meeting in Wilmington, Del.: a fresh quarterly profit and interest from a big-money investor who thinks the company is a good buy.

"Our plan is working, and we're sticking to it," chief executive Alan Mulally said. "In spite of the head winds we face, we are more excited than ever about the incredible new Ford we are creating."

Ford reported last month that its first-quarter profit was $100 million, testament to what it said was cost-cutting, restructuring and surging South American vehicle sales, which offset the ongoing North American sales slump.

At the same time, nonagenarian billionaire investor Kirk Kerkorian's Tracinda Corp. holds 4.62 percent of Ford stock, making him the company's fourth-largest public shareholder. He has said he wants to up his stake to 5.6 percent.

"We welcome Tracinda and thank them for their confidence in our plan," company Chairman Bill Ford said yesterday, according to the Associated Press.

Shares of Ford closed up 24 cents at $8.20. Ford's market capitalization is $16.4 billion.

Cole noted that Ford shareholders should not get too used to consecutive quarterly profits -- at least not yet.

"Historically, [economic downturns] create pent-up demand," he said. "Particularly after companies have been able to cut costs, they have become very profitable very quickly."

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