Ford's Stock Plunges Despite Biggest Profit Since '99

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Following a year of steady gains, Ford's stock plunged Friday after the company missed fourth quarter earnings forecasts.By Chris Isidore, senior writerJanuary 28, 2011: 12:54 PM ET

NEW YORK (CNNMoney) -- Ford Motor posted its highest annual income in more than a decade Friday, although fourth-quarter earnings disappointed investors. The problem for Ford was more one of expectations than execution, as Ford's results included a lot of good news, but also some increased costs, such as the price of raw materials as well as spending on engineering and marketing, that caught Wall Street analysts by surprise.

As a result of its first earnings miss in two years, Ford (F, Fortune 500) shares fell more than 12% in midday trading. Still, even with that sell-off, shares are up more than 40% over the course of the past 12 months. Despite the earnings miss, full-year profits for 2010 climbed to $6.6 billion from $2.7 billion in 2009, the best since 1999. But the company, which recaptured its position as the No. 2 automaker in terms of U.S. sales in 2010, posted a fourth-quarter operating profit of $1.2 billion, or 30 cents a share, excluding special items. That was down from 43 cents a share on that basis a year earlier. Analysts surveyed by Thomson Reuters forecast earnings of 48 cents a share excluding special items. The result was below even the most conservative forecast of a 36 cents a share profit. At least part of the fourth-quarter disappointment came from a small loss in its European unit, compared with a profit there a year earlier. Ford had previously said it expected to be profitable in Europe in the quarter. But Lewis Booth, Ford's chief financial officer, said a bigger part of the problem was that the company failed to sufficiently communicate to Wall Street the impact of higher expenses. "We recognized we missed," he said during the conference call to discuss results with analysts and reporters. "We'll have to continue to do a better job communicating...
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