Ford to woo Wall Street with tech skills, investments

Ford has tried, but failed, to move the needle of its stock price in recent weeks as it has forged ahead with its vision of becoming a mobility company. It will try again on Wednesday when it hosts about 100 analysts and investors at its headquarters in Dearborn.

Ford has announced a slew of new partnerships and investments this year related to mobility and autonomous vehicles but so far has failed to impress Wall Street, which is more concerned about Ford's profit margins and U.S. industry sales that appear to have peaked.

Ford's stock price has fallen 10% since the start of the year even though it retains leadership in full-size pickups and just began producing an all-new Super Duty pickup.

To be sure, the entire automotive industry has often thought it deserves greater respect than it gets from Wall Street for its manufacturing proficiency and technological capabilities. GM's stock closed Tuesday at $30.94, or $10 lower than three years ago, and Fiat Chrysler's stock closed at $6.52 on Tuesday, which is 28% lower than it was in January even after plummeting 35% following the spin-off of Ferrari.

Meanwhile, tech companies such as Apple, Google and Uber — which are all also jumping into the autonomous vehicle race — trade at jaw-dropping multiples the auto industry can only dream about.

"On the mobility front, I think people just aren’t clear yet on where this whole thing is going, who the winners and losers are going to be, and what a winning formula even looks like," Ford Executive Chairman Bill Ford said Tuesday in Dearborn.

Just a short time ago, Ford said many influential people in Silicon Valley thought automakers would eventually become similar to the handset manufacturers in the cell phone industry who simply made low-margin products while tech companies provided the swanky software and features. That perception is changing, Ford said, but is changing slowly.

"I think all of the tech companies have discovered that we bring a lot more strengths to the table it than they thought perhaps just one year ago or two years ago," Ford said toward the end of a two-day conference in Dearborn designed to showcase Ford's vision of the future for the media and bloggers.

Last month, Ford announced it would double its staff in Silicon Valley to speed up the development of an autonomous vehicle it plans to launch by 2021. The automaker also announced plans to invest $75 million in Velodyne, along with partnerships and investments in several other companies.

Last week, Ford acquired San Francisco-based Chariot and is planning to expand that company's shuttle service globally and also is expanding into shared bike services.

"Ford has made numerous announcements of strategic and technological initiatives aimed at auto 2.0
(shared, autonomous, electric) with real investment expenditure at both the R&D and partnership level," Morgan Stanley analyst Adam Jonas said in a report last month. "Yet, the stock market doesn´t seem to care. Ford´s stock price has underperformed the S&P by nearly 20% year to date."

While Ford earned a record profit of $7.4 billion last year, there have been red flags for investors this year. The automaker's second quarter profit fell 9% to $2 billion and executives warned that the second half of 2016 would be tougher than the first half.

The automaker expects a $145-million negative impact in the third and fourth quarters because of the United Kingdom’s vote to leave the European Union. Britain accounts for one-third of Ford’s European sales, and consumers are expected to buy fewer vehicles in coming months.

Last week, Ford reduced its 2016 profit forecast by $600 million, primarily because of the cost of a door latch recall covering 2.4 million vehicles in North America.

There also are concerns that Ford could get too infatuated with its goal of becoming, as its executives like to say repeatedly, "a mobility company and an automotive company."

“My fear is that they’re losing a little bit of focus," Bernie McGinn, chief executive officer of McGinn Investment Management of Alexandria and a longtime Ford investor told Bloomberg News last week. "It’s nice to talk about the driverless car, but you’re in the business of selling cars now, not five or six years from now."

Ford CEO Mark Fields said the automaker won't become distracted.

"We remain absolutely focused on our core business," Fields said. "We never run our business based on day-to-day stock changes. ... The way we are approaching it, we are focused on what drives value creation."

And even with its recent buying spree of Silicon Valley start-ups and tech companies, Ford insists it is being cautious and strategic about how it is spending its money.

"Deployment of capital is the No. 1 topic" among the automaker's top management, Ford said, as the company aggressively works on ways to help people better navigate densely populated urban cities and explores ways to get food and medical supplies to poor people in underdeveloped countries.

"​Conversely, we also cannot be like kids in candy stores and just grab everything that comes along," he said.

So what happens if Wall Street doesn't buy the automaker's pitch?

Ford argues they will eventually come around and says the Dearborn automaker is in a position to be more patient than most companies because the Ford family is still in control of the company.

"I am sort of in this for the long haul. I am a little bit more relaxed" about it, Ford said. "I really do think with the family involvement it does allow us to look longer term. ... It's much more important that we really set the right course and are very thoughtful and have a long-term point of view than worry about how something is reacted to in the very short term."

Contact Brent Snavely: 313-222-6512 or bsnavely@freepress.com. Follow him on Twitter @BrentSnavely.