Ford reports its worst loss ever

What a way for Ford Motor (F, news, msgs) to kick off a year.

The struggling U.S. automaker today reported that its fourth-quarter 2006 loss totaled $5.8 billion -- yes, that's billion. That translates to a loss of $3.05 per share, worse than the $74 million loss, or 4-cent-per-share loss, Ford reported in the same quarter a year ago.

Excluding special items -- mostly from buying out its workers -- Ford said its loss would have been $1.10 per share; analysts were expecting a loss of $1.01 per share.

Ford's shares rose early in the day, but closed just 2 cents up at $8.22 amid broad market declines.

A Mustang a minute

The full-year loss totaled $12.75 billion, the worst in the company's 103-year history. Broken down, the annual losses amount to a loss of a brand-new Ford Mustang convertible (MSRP: $24,100) every single minute.

In fact, any way you look at it, the loss breakdown is pretty ugly:

• $34,795,000 per day

• $1,450,000 per hour

• $24,100 per minute

Previously, Ford's worst loss had been in 1992, when the automaker reported a yearly loss of $7.39 billion.

As of yesterday's close, shares of Ford were down 3% for the year -- although today's gains erased much of the loss. Ford blamed plummeting truck sales, a billion-dollar charge for employee buyouts and a 24% reduction in North American production.

No improvement soon

Ford said it does not expect to see an improvement in the first half of 2007 but did say it expects losses to narrow later in the year.

Still, at least one analyst remains skeptical. "We're in the first or second inning of a turnaround plan," portfolio manager Dan Poole at National City told Bloomberg News. "You aren't going to see the numbers turn for quite a while yet -- we think the second half of 2008 at best."

Weaker lineup, sinking share

The company had a weaker lineup of models last year, as it built fewer automobiles to reflect sinking market share.

Its Taurus sedan was once the country's best-selling car, but it was discontinued in 2006 because demand mostly came from car rental agencies. Ford also got out the minivan business last year.

But while demand (and production) dropped, Ford's expenses didn't.

The company ended up with many truck factories that were doing nothing in the fourth quarter, while union workers were still being paid.

Ford, in response, offered all 75,000 of its factory workers buyouts or enhanced retirement packages to entice them to leave; 38,000 workers took the deal.

This was the first quarter for new CEO Alan Mulally, who took the reins on Oct. 1, after family scion Bill Ford stepped down from the job. Mulally, who came from Boeing, has been trying to resuscitate the automaker with more job cuts and plant closings.

Mulally is also facing the harsh reality that Ford, long the No. 2 U.S. automaker, will now come in third, behind Japanese automaker Toyota Motor (TM, news, msgs) and No. 1 General Motors (GM, news, msgs).

By Elizabeth Strott