Efforts to Branch Out Prove Costly for Ford
The lesson for Ford Motor Co. after saying it will take a $200-million charge to sell auto dealerships and write down electronic-commerce
investments: Stick with automaking, investors and analysts say.
The charge was part of a $900-million hit against this year's earnings disclosed Aug. 17, when Ford said it would eliminate as many as 5,000 salaried jobs to begin restructuring in North America.
Ford shares hit a three-year low this week as Ford CEO Jacques Nasser struggles with shrinking sales and market share, vehicle quality control problems, plant efficiency, and litigation regarding the safety of tires on the Explorer sport-utility vehicle.
Part of the $200 million charge stems from Ford's decision in June to give up a four-year experiment in which it owned auto dealerships, according to spokesman Todd Nissen.
Nasser announced in June that Ford would sell seven stores in Tulsa, Okla., to UnitedAuto Group Inc. and sell others in three cities by year-end. The move was taken in part to appease dealers angered by the idea of having to compete against the automaker.
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