Investors sent Ford Motor shares skidding after the company posted a 2020 forecast, warning of higher warranty costs, lower profits at its credit arm and continued spending in future technology such as autonomous cars.
Shares in Ford dropped 9.4% in after-hours trading, shaving over $3 billion off the company’s value. In comparison, electric automaker Tesla closed up nearly 14%, pushing its market cap to $160 billion, about four times higher the size of Ford’s $36.4 billion.
“The results were not OK in 2019,” stated Tim Stone, the Ford Chief Financial Officer.
“As I look to 2020 and beyond, I’m very optimistic,” Stone said, while cautioning that Ford’s lower guidance does not yet account for the possible impact of the coronavirus outbreak in China.
In an after-hours call with financial experts, CEO Jim Hackett was more blunt regarding the challenge of balancing Ford’s protracted turnaround efforts with its ongoing work on future technology, including electric and autonomous cars.
“I don’t think this company can keep straddling the old and new worlds forever … This company has to change,” Hackett stated.
Ford stated it expects 2020 operating earnings to be in the range of 94 cents to $1.20 per share. Analysts were expecting $1.26 per share.
Stone stated the automaker expects to continue its quarterly dividend of 15 cents, which could cost the company $2.4 billion in this year. Asked about continuing the dividend after lowering its 2020 guidance, Hackett answered, “We like to return value to shareholders”.