Chin Up in the Downswing

positive economic news during recession

Chin Up in the Downswing: Ford Losses Not as Bad as Expected; Amazon, Microsoft and Netflix Show the Resilience of Tech and Online Companies

April 24, 2009 07:00 PM
by Anne Szustek
Business news to feel good about this Friday: Ford is poised on the road to recovery. Meanwhile, Amazon and Microsoft post encouraging earnings and Netflix smashes analyst estimates.

Ford’s Cash Losses on Track to Decelerate

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One bright spot in the Big Three auto crisis: Ford posted lower losses than expected during the first three months of this year. The auto manufacturer reported that excluding one-time items, first-quarter 2009 losses were $1.8 billion, or $0.75 per share, compared to the average projection of losses per share of $1.23, according to analysts polled by Thomson Reuters. Ford CEO Alan Mullally said in a statement quoted by The Wall Street Journal, “I remain encouraged by the progress Ford is making to allow us to operate through the downturn and emerge as a lean, globally integrated auto maker poised for profitable growth when the economy rebounds.” Ford, the only of the Big Three Detroit automakers not to take U.S. government loans, has $21.3 billion in cash on hand; Ford CFO Lewis Booth says this is enough for the rest of the year. 

Microsoft, Amazon.com Earnings Shore Up Confidence in Tech Sector

Amazon.com posted an 18 percent year-on-year increase in sales to $4.89 billion during the first three months of this year. Profit at the online retailer went up 24 percent y-o-y to $177 million, working out to $0.41 per share. Software company Microsoft, which for the first time since the company went public in 1986 saw a decline in quarterly revenue, still managed to hit analysts’ earning estimates of $0.39 per share. AT&T, eBay and Apple also beat analyst estimates for this past quarter, suggesting communications, personal tech and online retailers have been weathering this recession well. 

More Entertainment: Netflix

Another testament to the value of easy company-to-customer distribution: Netflix, the online-to-door DVD rental service, posted a 20 percent y-o-y increase in quarterly revenue during the first three months of this year. Earnings per diluted share were $0.40, beating analysts’ estimates of $0.31 per share. And in the biggest example of how at-home entertainment can survive, or even grow during recessions, Netflix posted year-on-year net income growth of some 70 percent during first quarter 2009. 
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