Will The Real Ford Earnings Stand Up
Ford released its Q4 and full-year 2010 earnings this morning, and it serves as a poster child for the media's determination to turn everything into a good-news/bad-news, black-or-white headline. The New York Times article proclaims that "Ford Reports Largest Profit in 11 Years." Wow, that's pretty darn good. But then why does the WSJ report that "Ford's 4th-Quarter Profit Falls 79%"? How is such a dichotomy possible in an age where everyone has instant access to every conceivable data point? Well, as gravelly voiced Tom Waits tells us, "the large print giveth and the small print taketh away." So the small-print story of Ford's quarter is that the company took a one-time charge related to the conversion of debt. If you choose to focus on that event, which served to reduce debt and cut annual expenses, then the quarter was bad. If you exclude the one-time charge, Ford had a blow-out quarter. In either case, the moral is to not buy or sell Ford based on a single quarter: but especially don't buy or sell based on headlines.
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