Ford Motor Company (F) Stock Is Dead Money Until It Gets a REAL Innovator

Shuffling the deck chairs on the Titanic is not going to save Ford stock

Ford Motor Company (NYSE:F) changed up its dance card this week sending Mark Fields to the sidelines, replacing him with 62-year-old Jim Hackett. Like voting in a 70-year-old president, Hackett’s hiring is going to hurt Ford stock.

Ford Motor Company (F) Stock Is Dead Money Until It Gets a REAL Innovator
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I’ve never met the man and don’t know any more about him than most InvestorPlace readers do, so I’m not about to suggest his tenure will be a failure, but I can say that investors will recognize pretty quickly that Hackett is not a permanent fix.

What Ford needs is a CEO who has more vision than just setting a goal to sell 9.4 million cars annually by 2020, something former CEO Mark Fields did in September 2014 at its annual Investor Day Presentation.

F Stock: Corporate Speak Kills Innovation

At the same time, Fields was shooting for the moon, he told those in the audience that Ford had five targets for judging its future success:

“1. Being one of the top five automakers in global sales.

2. More balanced regional and segment profits.

3. Profit margins of 8 to 9 percent.

4. Being in the top quartile of shareholder return.

5. A strong reputation. “We want to be highly regarded by all stakeholders,” Fields said.”

Sure, I get that he was speaking to an investor audience, but I can guarantee you these are not the words Tesla Inc (NASDAQ:TSLA) CEO Elon Musk would ever use to describe Tesla’s view of its future success.

If Ford wants to climb out of the hole, it finds itself it needs to stop being so bloody corporate and dream a little. Channel Lee Iacocca if it has to by pulling out Iacocca’s old Snoop Dog commercials and watching them as many times as necessary to make it happen.

And while Ford’s at it, the company might want to consider how Amazon.com, Inc. (NASDAQ:AMZN) CEO Jeff Bezos thinks about his company’s business practices. It’s not about dollars and cents; it’s bigger than that.

Focus on what’s critical, and the revenue and profit growth will happen. If you don’t, you’ll be left behind by the competition.

Hackett’s Saving Grace

InvestorPlace Feature Writer James Brumley recently discussed why the CEO switch at Ford might come back to haunt it. Specifically, Brumley feels that Fields understood the need for change and was working hard to push the company in that direction.

“Fields also has never been under any illusion that the business isn’t changing. The company can’t afford to see itself as a carmaker any more,” wrote Brumley on May 22 after Ford announced the change.

Brumley elaborated:

“It’s now in the business of transportation solutions, and Fields hasn’t been shy about moving in that direction. Case in point: Well more than a year ago, Ford unveiled its FordPass app, which among other things serves as a digital wallet and helps you find a parking space, was built in such a way that would eventually facilitate a ride-sharing feature.”

He’s right.

Fields’ was willing to think outside the box from time-to-time, but not nearly enough to compete in a fast-moving, ever-changing industry.

A May 25 article from Reuters does a good job summing up Ford stock’s biggest issue — a lack of new product launches — suggesting crosstown rival General Motors Company (NYSE:GM) is getting new products to market much faster.

It doesn’t take a rocket scientist to understand part of the reason why GM is able to do so is CEO Mary Barra’s engineering background helped free any logjams in product development.

Now, as for F stock, I think it has a chance if the new CEO understands that he’s merely keeping the seat warm until the company can find someone a little younger, a bit more experienced in the automotive industry, and most importantly, a lot more visionary.

Hackett seems like a good guy, so I’m hoping he’ll do the right thing for Ford stock and not make this a personal crusade.

Bottom Line on Ford Stock

USA Today suggested May 22 that Bill Ford Jr. is a big fan of Hackett’s. That worries me. Not because Ford Jr. thinks Hackett’s a great leader and able to think outside the box, but because I always reflect on the saying “from shirtsleeves to shirtsleeves in three generations” when someone from the founder’s family weighs in on the running of the business.

In this case, Ford Jr. is Executive Chairman of F and has worked at the company since 1979 after graduating from Princeton, so it’s an entirely different situation.

That said, the company, can only succeed if it stops dwelling on the past, and looks to the future. A future where Jim Hackett is Executive Chairman and someone else is CEO.

Until then, Ford stock is dead money.

As of this writing, Will Ashworth did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2017/06/ford-motor-company-f-stock-dead-money/.

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