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Ford shares fall after $2B judgment in dealer suit
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2011/06/13 20:30
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Ford Motor Co. shares sank early Monday after an Ohio judge said the automaker had to pay nearly $2 billion in damages to thousands of dealerships who participated in a 2002 class-action lawsuit. But the shares pared their losses as several analysts downplayed the news and said Ford can absorb the damages even if loses a planned appeal.
Cuyahoga County Common Pleas Judge Peter Corrigan in Cleveland issued the ruling based on a Feb. 11 jury determination that the company overcharged dealers for commercial trucks over 11 years. The $2 billion award covers more than 3,000 dealerships and about 474,000 trucks. It includes a judgment of about $781 million and about $1.2 billion in interest.
Ford is appealing the decision. Ford chief counsel David Leitch said Monday that it will likely take several years for the case to wind its way through the Ohio appeals system.
Standard and Poor's reiterated its Buy rating on Ford Monday afternoon, saying that if Ford loses the appeal it would be costly but absorbable, with Ford taking a hit of around 47 cents per share. Barclays Capital analysts also reiterated a Overweight/Neutral rating and said they don't expect a significant impact to Ford's cash position in the near term because of the length of the appeals process. |
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