Ford stock jumps on surprise profit

Ford Motor (F) shares shot up 10% right after today's open after the company surprised investors with a third-quarter profit and bullish guidance for 2011.

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Next year, the company conceded, still has many headwinds, including a weak economy in the United States and the end of European versions of the Cash for Clunkers program.

The shares were up 9.6% to $7.67 at  10 a.m. ET  and helped the stock market push sharply higher in early trading.

Ford's results come a day before automakers report October sales. Ford's will be the first of the U.S.-based companies to report.

Edmunds.com is predicting a seasonally adjusted rate of 10.35 million units. Aside from the months when Cash for Clunkers was operating, that would be the best monthly sales performance of the year.

"There are clear signs that the automotive industry is finally starting to recover from the painful lows experienced earlier this year," Jessica Caldwell, Edmunds' director of industry analysis, said last week.

General Motors (MTLQQ) is expected to report 179,000 units, up 5.7% from a year ago, Edmunds said. Ford sales are expected to drop 3.5% from a year at 128,000 units but up 12.6% from September.

Chrysler sales are expected to drop 31.4% to 65,000 units.

Ford said it earned $997 million, or 29 cents a share, for the third quarter, compared with a loss of $161 million, or  7 cents per share, a year ago. Revenue fell by $800 million to $30.9 billion.

Analysts had expected revenue of $27.6 billion.

Operating profit was 26 cents per share excluding one-time items. On that basis, analysts had expected a loss of 12 cents per share, Reuters said.

Fueling the decent results were the Cash for Clunkers program in the United States, which boosted August sales 21% from a year earlier, more than $1 billion in cost cuts and improved results at its Ford Credit subsidiary.

Its North American business earned a pre-tax profit of $357 million, up from a loss of $2.6 billion a year ago. It was the first profit for North America since the first quarter of 2005.

Ford burned through $4.7 billion of cash in the first half of 2009 but reported $1.3 billion of positive cash flow in the third quarter -- its first positive cash flow since the second quarter of 2007. It said it expects positive cash flow in the fourth quarter as well.

While the financial position is improving, labor may another matter.

The United Auto Workers union is expected to announce today that its rank-and-file workers have rejected concessions union leaders agreed to in a tentative agreement with Ford in mid-October.

Ford received $500 million in annual labor cost savings from concessions negotiated with the UAW in February. The company said it needed further cuts to align long-term costs with those of GM and Chrysler.

Ford's union workers in Canada ratified a cost-cutting deal over the weekend to preserve most of the Ford jobs in Canada.

The proposed agreement U.S. workers are chafing at includes a "no-strike" clause on wages and benefits and a reduction in job classifications for skilled trades workers, as well as some production commitments and a one-time bonus of $1,000 per worker.