Motley Fool Money - Motley Fool Money: 03.01.2013

Episode Date: March 1, 2013

Groupon CEO Andrew Mason calls it quits. Nevada and New Jersey legalize online gambling.  And Priceline bucks the trend in Europe.  Our analysts discuss those stories and journalist Bryce Hoffman talks about the future of Ford. Learn more about your ad choices. Visit megaphone.fm/adchoices

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stocks, we got the 25 best companies in America. We'll talk about the future of Ford Motor and the automotive industry with bestselling author Bryce Hoffman. And as always, we've got a few stocks on our radar. But we're going to begin this week with Groupon. Shares were down more than 20% on Thursday after terrible fourth quarter results, but they bounced back Friday morning after CEO and founder Andrew Mason was fired late on Thursday. And Jason, Andrew Mason said as much in his farewell letter, he had to go. Yeah, and that was a good farewell letter. I mean, I think it was probably the most effective communication we've seen from him thus far. And included a joke. You don't usually get a joke in a resignation letter. You really, really showed us true colors there, some humility and a

good sense of humor. But, I mean, this is something that obviously needed to happen. I don't think it's a surprise that it happened, especially given their core. But I would also warn investors to please not be fooled into thinking that just a leadership change makes everything all better here, because you still have the same underlying problem in a company with really no distinct competitive advantages in an industry that has virtually no barriers to entry. And so the leadership change is one change of probably many that they're getting ready to put forth here. And I think this is just the beginning of it. Yeah. And Charlie, speaking of the underlying business, I mean, just to go back to those fourth quarter results, they lost $81 million. They forecast flat

sales. Margins are shrinking. Cash flow is declining. I mean, is there any... But it rhymes with coupon. It does rhyme with coupon. That might have been the Best move they ever made. I mean, it's kind of hard. I was waiting for a bright spot on you there. I was actually going to turn it over to you for any silver lining in this business. I think that they do have a well-known name and brand. I do think they have a large number of users, but I think they need to tweak the business model a little bit.

The economics of these deals are not that great for merchants. There tends not to be a lot of repeat use because of that. If you have a restaurant and you're selling your dinner at half off and you only get to keep half of that money, that's a losing proposition unless you get to keep those customers who tried you for the first time coming back for more. So maybe they can introduce some loyalty elements to get that kind of repeat business. But something's got to change other than just the CEO. What do you think, Ron? I think the IPO was a real shame and left a lot of people holding the bag. It went public, I think, I'm sure at the time, we were all over.

Market cap of $16.5 billion when they went. public and now it's around $3 billion. Right. In a sense, you can't fault the company for trying to get the best valuation they can in the marketplace. But with the weird metrics that they originally put forth that didn't include those marketing expenses, all that kind of stuff. It really was just a shame. It's the kind of case where the IPO markets really don't work for the individual investor. And that's why everyone really should be careful about what they're buying if they're kind of lucky enough in quotes to get in on IPOs.

And it's not terribly surprising that they have not been successful as far. I mean, you can look at Amazon's quarterly reports, and they continue to write off this living social investment. And living social just, they recorded a $650 million loss here for 2012. So it's just not the most lucrative, defendable business model in the world. Now, with that said, Charlie, I think, said a very important word here in loyalty. And I think, let's try to come up with some ideas of how Groupon can get better. And I think one of the keys there is to try to figure out a way to develop a more loyal, following sort of a stickier consumer base. And I think it would be important for them to be able to partner up with someone in some regard, whether it's a Visa or a MasterCard or an American Express. And we've talked before about American Express and their deal with Twitter. And I think that's a great example of just something that, you know, Groupon could pursue in order to create a little bit more of a loyal customer base. Keep people coming back for more. This week, New Jersey became the biggest state yet to allow regulated online gambling. The new law signed by Governor Christie allows casinos in Atlantic City.

to run websites that take bets on poker, blackjack, and slots. Ron, last week it was Nevada passing this kind of law. This week it's New Jersey. It kind of seems like it's one of those situations where the dominoes are just going to start falling in terms of the states. And we saw stocks rising sort of across the board, not just the casino stocks, but even Zinga was popping on this news. I think this was inevitable.

It was going to be the next iteration of gambling. It had to happen at some point. the major holdup was the Department of Justice, which starting really in 2011 began to signal that they were going to lighten up on this. There's still a lot of hurdles on a state-by-state basis. Gambling still has a stigma that is negative to many folks, but it's coming, and it is definitely the future of gambling. And there's going to be a lot of winners, whether it's the technology companies, the social gaming companies, the casinos themselves, even the Indian tribes that run these casinos in a lot of jurisdictions, a lot of people are going to benefit. it and the 15% tax that New Jersey is going to collect on all this additional revenue doesn't

hurt either. But are some companies in better positions than others? Because just on the face of it, it would seem like it would be the casinos themselves because they already have the apparatus in-house to deal with state regulators. And that is a whole side of the business that obviously isn't glamorous and doesn't really make them any money per se. But that's among the most crucial part of the business. And if you're Zinga, yes, you have the opportunity to now go into gaming sucks, but you now all of a sudden have to build from the ground up a state regulator department within your business. Well, I want to say yes. I think you're exactly right.

The casinos have the infrastructure in place to get this done. Now Zinga does have, for example, 15 million online poker players right now that are not playing, not gambling. It's games. You can probably convert a significant amount of those people to be actual gamblers, but again, you're correct when it comes to the regulatory issues. Charlie, you're the best poker player in the room. I turn to you. With some of the scandals that have come around with the poker gaming sites, I agree with Ron that the casinos are the winner because it's not just the infrastructure and dealing with the regulators. It's a matter of trust that the site is not going to steal your money. It's a matter of trust that the game you're playing is actually fair. The odds are still stacked against you, by the way, but at least it's fairly against you and they're not cheating.

So I think the casinos are the winner here. Best Buy's fourth quarter loss came in lower than expected, and shares were up a little bit Friday morning as a result of that. Charlie, one of the narratives we've seen playing out over the last few months is Richard Scholes, the founder of Best Buy, really trying to take the company private looking to line up the financing to do that. And separate from the quarterly results was the news that Best Buy Registry. his latest offer, which was just a $1 billion investment. When you look at Best Buy, what leaps out at you? Sure, Chris. Right. So last August, Schultz proposed acquiring the company for $24 to $26 a share.

It's at 16 right now. The deadline for his... Take it. Take the money if it happened. And he does own 20% of the stock. But the deadline to buy the entire company did pass without an offer. And the suspicions are that he couldn't get the financing. But if you look at the companies, operations for the year. Revenue was flat. Their comps were down a little over 1%, which actually isn't that bad, considering the business they're in and who their competitors are. And the domestic was stronger than the international. They mentioned that Canada and China were weak. So there are some bright spots for Best Buy online. Could be very interesting for them. They're seeing double-digit growth in computing and mobile phones, which are no doubt what people

are buying these days. And what's bad is consumer electronics and entertainment. They face a lot of competition, not just from Amazon, but from Walmart and Target, just cutthroat pricing there. So I think all in all, Best Buy is actually still making money, and, you know, it's not all doom and gloom. I think there are some bright spots in this report. Jason, I have to believe that some of their locations are much more profitable than others. Is the path forward for a company like Best Buy just to get smaller as quickly as possible to really focus on the ones that are more profitable? I think it's going to have to do that. I mean, certainly I'd be very concerned if they were opening new stores. I mean, what we're going to

see probably for the foreseeable future here is some serious gross margin pressure because with the price matching initiative, they're not going to really have any choice but to go ahead and sacrifice profitability just to keep their just to keep their head in the game here really. But yeah, I mean, focusing on the more profitable stores and I think they're just going to really slim down the operations. It's kind of, you're sort of, you're seeing Radio Shack kind of fall off the world here, Best Buy is going to sort of probably squeeze in there, take some of that space with a mobile phone business. The problem is that's not the most lucrative business either. So, you know, I think the other, The other thing they really need to focus on is the online initiative.

The more they can devote towards internet sales, trying to do something a la Amazon, the better chance they have of staying in longer. But I think profitability is going to be really hard to come by for them. I'd like to see them differentiate themselves by the service aspect on the showroom floor. So if you want cheap, you can go to different places, but if you want some advice and to really know what you're buying, you go to Best Buy, they're just not getting that. done. It's a disaster in terms of the sales staff. But if you look at their marketing, I mean, their latest commercials with Amy Poehler,

where one of the key messages, I mean, the overall theme is one of customer service, but one of the key messages is, hey, we don't make money on commission. We're just here to help you make the right choice. Joe, it seems like maybe they might benefit. I mean, we've talked about that before the service aspect. Make it something that you can't get online, something that Amazon can't specialize in, for example. So the service side of it, if they whittled it down and almost became like a consulting business to some degree where if you're looking for someone to help you in installing an entertainment space in your home or whatever it may be, I mean, a resource to

contact and to talk with and to get some ideas from, that might be something. Do you have that on the tech side with their geek squad? You know, somebody who's local who can actually sit down with you face to face, whereas you're calling some random stranger around the world is appealing. H. H. Craig actually does a good job with their sales staff. That's the name of the company, H.S. Yeah, so I mean, so I don't know if there's two of those are needed in the world. Probably not. But maybe taking a page from their notebook would be a good idea. Shares of JCPenney down more than 20% this week after fourth quarter results.

And Ron, obviously, there are a lot of numbers on the table. The one that leaped out at me was the fact that same store sales were down a whopping 32%. I don't know if I've ever heard of same store sales being down so poorly. Ron Johnson, so far is not getting it done. Now, to give him some credit, he did say. this was going to be a multi-year process. So he was right. He was completely right. It appears it is not going well, though. The boutique concept creating many, you know, dozens and dozens of boutiques within JCPenney and taking kind of the sales promotional couponing away doesn't seem to be what the core customer wants. So he is admitting that he's getting back to the sales. He's going to start running weekly sales. There will be promotions and coupons. So that's good. but I'm just not sure in this competitive environment, retail is a tough business if JCPenney can turn it. Well, similar to Best Buy, when you look at the fact that they have 1,100 stores, they have 160,000 employees,

isn't getting smaller as quickly as possible? Isn't that part of the solution? I definitely think that's the case. You look at probably take your most profitable stores, maybe your top quarter, top half, you get rid of the rest. I think you can have some of that boutique concept still in the store, but also offer some sale merchandise to the core customer. Maybe you can compete and be profitable under that scenario. The balance sheet's not strong. They're CCC plus. That's triple C plus to you and me.

Credit rating the lowest tier of junk. So the balance sheet is not necessarily there for them to get this done. And I don't know how they're going to access capital. So they're in trouble. So we've been following the story for almost a year now. And if I go back to their Q2 call, that was supposed to be the bottom. And they said up front, it's going to get worse before it gets better. We're not seeing signs that it's getting better.

I think it's actually getting worse. And it seems like each quarter that comes on, they're like, oh, we tried this. It didn't work. And we're going to try this new pricing strategy or merchandising strategy. And it just seems like they're throwing a lot of stuff at the wall and nothing's sticking. Ron Johnson may still have some time left because Persian Capital, Bill Ackman's company, and Renato Realty own 40% of the company. They're still sticking with him and understand the multi-year concept, but they'll turn out a dime.

They're in this for a profit. Coming up, we've got the battle of home improvement stocks and the 25 best companies in America. Stay right here. You're listening to Motley Fool Money. Hey, it's Chris here. Is your business protected from data loss? If not, join the 80,000 businesses who trust Mosey to protect their important information. Mosy automatically backs up your critical files to world-class data centers with maximum security. It's easy to use and costs up to 80% less than other solutions. Learn more at mozy.com.

That's m oz.y.com. Mozy, it's always there. As always, people on the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against. So don't buy or sell stocks based solely on what you hear. Welcome back to Motley Full Money, Chris Hill here in studio with Jason Moser, Charlie Travers, and Ron Gross. Programming note, next week, Motley Fool Money will be recorded live

at the Kogod School of Business at American University in Washington, D.C. We're doing a taping on Thursday night, and if you are in the D.C. area and would like to attend, drop us a note. Radio at Fool.com. That is Thursday, March 7th, at the Kogod School of Business at American University. Two home improvement stocks reporting this week. Lowe's fourth quarter earnings came in better than expected, but the guidance for 2013 was disappointing. Home Depot, fourth quarter profits came in higher than expected. So, Jason, not a big surprise. Home Depot shares doing a little bit. a little bit better than Lowe's this week. Yeah, I think Home Depot was the winner of the two.

They were decent quarters. Lowe's was a little bit less stellar, so to speak. But I do think that these are both good signs that there is some traction, at least, in housing. Consumers are getting back out there and buying. The one thing I like about Home Depot and Lowe's, these are two great ways, I think, to play the housing rebound, so to speak, because they don't, they're not so levered just to whether housing is good or bad, you know, because they can still benefit from the renters and they can benefit from people buying homes as well, new home construction. There's always something to get at Home Depot or Lowe's and always something to do.

I like Home Depot better in this case. It's bigger. They're able to bring a lot more of the cost savings down to the bottom line. It's more profitable operation than Lowe's. And certainly the raise and the dividend in the $17 billion stock buyback show that they are very optimistic of their future as well. Shares of price line up this week after fourth quarter earnings came in higher than expected. Charlie, revenue up 20%. This company's just crushing it. Yeah, they sure are, Chris. Bookings were up 31% to $28 billion. That's just a huge number. That's people buying hotels, flights, and rental cars through their websites.

Earnings per share were up 34%. And they're guiding for another year of 30% growth in 2013. Some of the bright spots for them is the growth in Asian and Latin America. Their core market is Europe, just to put that in perspective, through their bookings.com websites. They just have a huge network of hundreds of thousands of hotels that you can go to their website and get a great deal on. For the past several months, we've been compiling data and analyzing more than 1,700 public companies to come up with our list of the 25 best companies in America. And when I say we... Yeah, we haven't been doing it.

I've got to give a shout out to our managing editor of Fool.com, Brian Richards, and the whole team that worked on this, John Reeves, Alon Moskowitz, on in Chakavelu, Darry Fitzgerald and Chris Weiss. cover, basically weighing how companies treat all of their stakeholders and coming up with a list of the 25 best. So working off of that list, what's a stock that's on your radar, Ron? Unlike two retailers we discussed earlier, Best Buy and JCPenney, Nordstroms knows how to do retail, and it's a fantastic company. Relatively high-end, but great, great customer service. They pay their workers on average 60% more than the average retailer, higher profit margins than Macy's and sacks. So they do a really wonderful job, only about 240 stores. So they know how to do it right, unlike we said JCPenney with more than a thousand stores. So it's just a wonderful

company, not screamingly cheap, but also not very expensive, just kind of where you think it would be. And the ticker symbol? I'm drawing a blank, gentlemen. What is the ticker symbol in Nordstrom? It's the initials. It's an N-O-R-D. No, no. It's J-W-N, I think. It's J-W-N. I get a point for that. Charlie Travers, what's your stock off the list? with Google Chris. It is just one of the most innovative companies in America. And it's not just that they come up with great things like Gmail and search. It's that they make it easy for their consumers to use, really breaking down a lot of the barriers that can be intimidating about tech. And I think that's one of the reasons they're so successful. And the ticker? G-O-O-G.

See, Charlie knew the ticker. Sorry, yeah. Sorry. I know my ticker, too. It's Under Armour. Number 10 on this list, ticker is UA, but, you know, this is Kevin Plank's business. And that's one of the reasons why I like it so much. He's certainly married to its success. Big competitor is Nike there, but Under Armour is doing a really good job keeping inventory under control, and they're witnessing some gross margin pressure there. But I do think that it's a long-term growth story. The stock is not cheap today, but I think that it's definitely one worth keeping on the short list. Under Armour is number 10 on the list. Google is number four on the list. Nordstrom is number 17 on the list. But if you want to check out the entire list, go to Fool25.com. That's F-O-O-O-L-25.com. It's our

of the 25 best companies in America. Ron Gross, Charlie Travers, Jason Moser, guys. Thanks for being here. We'll see you next week at the American Universe. Can't wait. Thanks, Chris. Coming up, a conversation with best-selling author, Bryce Hoffman, on the turnaround of Ford Motor and the future of alternative energy cars.

Stay right here. You're listening to Motley Full Money. Welcome back to Motley Full Money. I'm Chris Hill. When Bryce Hoffman first started covering the Ford Motor Company for the Detroit News back in 2005, the automaker was on shaky ground. Today, Ford is on solid footing, thanks in no small part to the leadership of CEO Alan Malali. It is a story captured in Hoffman's best-selling book, American icon Alan Malali,

and the fight to save Ford Motor Company. Bryce, thanks for being here. Hey, thanks for having me, Chris. So Alan Malali goes to Ford in 2006, after a long, successful career at Boeing. How bad were things at Ford when he got to? there, and what are a couple of the big things that he did to turn things around? Very bad, and they were a lot worse than I think anyone on Wall Street or anyone outside the company realized. One of the things that I learned when I was researching this book was

that they had already begun planning for bankruptcy when Alan was brought in in 2006. And, you know, it was a company that had really exercised all of its options. You know, they were running out road and they were burning through cash, you know, fortuitously before he even showed up, Bill Ford and then CFO, Don LeClair, had begun putting together this massive financing package that would become what Alan likes to call the biggest home improvement loan in history, borrowing $23 billion just before the global credit markets slam shut their doors, and that was very fortuitous, obviously, for the company. and it let Alan pay for really a top-to-bottom transformation of the company.

You know, new products, new ways of building cars, but really more important than that was a new culture, a culture that was based on teamwork, on working together, and that was something that was really new for Ford because this was a company that had really been at war with itself. You know, CEO transitions are tough to pull off under the best of circumstances. This seems like it may have been among the worst of circumstances. What in particular did Malali do to change the corporate culture? Because it seems like when a new CEO comes in,

whatever the industry, that culture is among the toughest things to make a significant improvement on. I think you're absolutely right, Chris. I mean, this is something that companies struggle with in every industry. I mean, I get calls all the time from companies who want to know how Ford did this and how they can use it in their companies. You know, changing culture is something that only happens, I think. And I think that Alan demonstrated this only happens by having a leader that is really committed to walking the walk, you know, not just talking to talk. Alan came in. A lot of people thought, you know, he's just going to fire everybody. He's going to bring his own people in.

You know, people were putting their resumes together. quite the opposite. He told everyone, look, I think Ford has the talent that it needs to save itself, but you've got to stop fighting with each other and work together. This was a company, you know, with some of the most sharp elbow of border and politics you can imagine, Chris. I mean, you know, there were decisions that were made right up until 2006 when he was brought on, you know, where people would make decisions about future product their region and undermine other regions of the company. I mean, that's how bad it was. So how did he overcome that?

He overcame it by making an environment where everybody would discuss the company's problems together every week in a kind of safe zone. No one was allowed to criticize anyone else. No one was allowed to blame anyone else. It was just a dispassionate look at that really kind of allowed the company to kind of overcome these personal politics and focus on the fundamentals of the business. You know, Alan Malali, and I obviously don't know the guy. I interviewed him a couple of years ago, but all the reports I see, all the coverage, he seems like he is on many levels a genuinely nice guy. But I can't imagine you get to be the CEO of Ford Motor Company. I can't imagine you get to that level of business success without being tough. So my question is, what does the Alan Malali brand of toughness look like? How does he wield power within Ford Motor Company?

You know, Chris, and it's a question that we asked him very soon after he came to the company because, you know, as you know, he's very abulian, awshuck's guy, and we asked him, you know, where's the toughness? And believe me, he is the proverbial iron fist in the velvet glove. He'll smile at you, he'll patch you on the back, but if you, you're not. you don't deliver on your commitments, he will hold you accountable. And that was new for Ford. This is an industry that was based on excuses, that was based on blaming other people.

And Alan, you know, would take these executives and say, you know, why is this going wrong in your division? And if they didn't have an answer, he just smiled them and say, well, I know you'll have it for me next week. And pat him on the back, but it was, it was, there was a firmness that was withering under that. Stair, holding people responsible for executing their part of the plan. Alan Malali is staying on as CEO through 2014, and the odds-on favor to succeed him is Mark Fields, who's the chief operating officer. What is Mark Field's leadership style like, and to what extent do you think he's going to be able to maintain this new and improved culture?

Chris, I've known Mark for a long time before Alan's name was even mentioned here. I was working with covering Mark when he was president of Ford's America's group, which was the company's largest division. Mark today is real cultural transformation. He's a guy who was the first person on the team to really get with the program. There's a story that I tell in the book that I think is really illustrative process works. And every week, you know, he would, he would, he would, asked executives to give a five-minute update on their part of the company and color-coded. All the data points would either be green if they were on-plan, red if they were off-plan or yellow, if there was a question.

For the first few weeks, all of these slideshows were green. And finally, Alan just stopped one of the meetings in the middle of the media and said, hey, guys, we're about to lose $14 billion. Is there nothing going wrong at this company? How do you explain it? The next week, the next week, Chris, Mark was preparing his slide deck. And this was in December of 2006. They were getting ready to launch the new Ford Edge, brand new vehicle.

And Mark knew that there was a problem that had been discovered at the last minute by some of the test drivers. And it hadn't been diagnosed yet. Some sort of rattle in the back. End of the year, this was the type of thing that would normally just be brushed under the carpet because people would be anxious to close the year out, get their bonuses, you know. No one would want to have to get called on the carpet for something. something like this at the end of the year. But he decided, you know what, I'm probably going to lose my job anyways.

So I'm going to see if this guy's for real. And he put it in red. And the next Thursday, Mark gets up and is giving his presentation. He gets to the product update slide. And he says, and as you can see here, everybody, we have a problem with the edge launch. It's in red. The entire room just fell silent, Chris. And I talked with every executive that was in that room.

all told me the same thing. They thought Mark Fields had just fired himself from Ford Motor Company. And then all of a sudden, they heard someone start clap. And he just kept clapping and clapping. And he said, wow, Mark, that's great visibility. Who could help Mark with this problem? And, of course, then everyone tripped over each other to try to offer help. The funny thing, though, Chris, is that even after that, people told me that they fully expected when they showed up gone, that Alan had just put on a brave face for the meeting

and that he had quietly taken him out behind the woodshed and lopped his head off in the next seven days. When Mark showed up the next week and wasn't in trouble and wasn't, you know, demoted or on the way out the door, everybody said, wow, I guess he really does mean it. And the meeting

after that, as Alan has described it to me, that a beautiful rainbow of color. You're listening to Motley Full Money talking with Bryce Hoffman. author of the bestselling book, American icon, Alan Malali, and the Fight to Save Ford Motor Company. What surprised you the most when you were working on the book? Chris, the thing that surprised me the most was just how close Ford got to going out of business.

I mean, I had been covering this company every day, you know, since 2005. I thought I knew what was going on, you know, and, you know, the truth of the matter is is that even with this massive home improvement loan, Ford's decision not to take a government bailout to fix its problems itself was one of the gutsiest moves in recent business. It's through the crisis. Go back in time to 2009, 2008, when the auto industry was just tanking here, and Ford had the opportunity to join GM and Chrysler and get in a government-sponsored restructuring. They chose not to. They made it through, but to do that, I mean, They had to get, they, they canceled the services that watered the plants in their offices.

They, they required a vice president of sidewalks on the campus. I mean, they cut so much just to keep the lights on through that period, but that paid huge dividends for them with the American public in particular. Coming up, Bryce Hoffman's biggest question about Ford and around of Buy Seller Hold. You're listening to Motley Full Money. Welcome back to Motley Full Money, talking with Bryce Hoffman, author of the bestselling book, American icon, Alan Malale, and the, The Fuller, and the podcast. fight to save Ford Motor Company. When you look around the world at the opportunities for

automakers like Ford, like GM, and this is an industry that you've covered for years, Bryce, where are the great opportunities? Because it appears that when you look at sort of large opportunities in China and Europe, China brings its own set of challenges with joint ventures. and Europe appears to be a place, and obviously I'm painting with a very broad brush here, but Europe appears to be a place right now that if you are an automaker or a shareholder of Ford Motor, your expectations about results in Europe for the next several years should be zero. You're absolutely right. I mean, Europe is a huge drag on everybody's bottom line, not just Ford's, but GMs,

Chrysler's by virtue of its ownership by Fiat, you know, all of the Europe. European automakers, certainly. I mean, Europe's ongoing economic crisis has just undermined their automobile industry in the same way that our economic crisis undermined our automobile industry in 2008 and 2009. The difference, Chris, is that in the United States, we were willing to make the tough decision, make the industry's output capacity match the decreased demand. We closed factories. We eliminated jobs.

We took an industry that was still spooled up to build cars like it was before there were companies like Toyota and Vokeswagon competing with it and downsized it to the point that it could be profitable again. The Europeans are not willing to do that. They are not willing to let companies like Ford or Chrysler or Fiat or General Motors close factories and layoff workers without a major fight. And as a result, the industry there is just losing money. at a phenomenal rate. Ford lost last year over $1.7 billion before taxes in Europe. You know, the opportunities, though, interestingly enough, America is an opportunity again,

which is something that if you had said that just three or four years ago, people in the auto industry would have laughed at you because we were in such bad shape. But the American auto industry is coming back. The American auto market is coming back, and that's helping buoy everybody's profits. But China, as you mentioned,

And China is the big opportunity. China is the holy grail in this whole thing for everybody because it has passed the United States to become the largest automobile market in the world. And, you know, companies like Ford need to grow there and grow there in a big way if they're going to succeed. Ford is obviously a company. You've studied very closely inside and out. At this moment in time, what is the big question you have about Ford Motor and their prospects? You know, the big question I have about Ford Motor, honestly,

is why their stock prices so low. I mean, if you look at this, Chris, this is a company that generates, and let me just be clear, I don't own a single share of it, but they generate between $3 billion and $4 billion in cash flow annually right now, all of which is accruing to equity. And so I have to ask myself, why are the equity markets ignoring that? It's also a company that not only has restored dividends, but has doubled those dividends this year.

And, you know, yes, there are problems in Europe, But, I mean, it's amazing to me that Ford is trading so low and that the financial markets aren't seeing the fundamentals that really exist there. But that doesn't mean that it's not a company without challenges. And I think the biggest one, honestly, Chris, is Lincoln. You know, they are in their umpteenth attempt to revive the Lincoln brand right now, and I'm still not sure it's going to work. Broadening out to alternative energy cars, you know, we hear about electric cars, hybrids, What do you think the next few years looks like when it comes to alternative technology? It's an electric vehicle, and it can barely sell any of them.

GM has struggled to sell its volts. Chrysler, through Fiat, just introduced its own electric vehicle, despite the fact that CEO Marcioni says that it's ridiculous, because there's the only reason that they're building it is for political reasons. And I think that this is the honest truth, though. I mean, for years, people have accused Detroit in particular of holding back the electric car. And for years, Detroit automakers have said they're not holding back the electric car. The technology is quite ready for prime time.

They think it's too expensive and they're not sure people actually want them. Well, they've now finally all built them. And guess what? The technology is proving not quite ready for prime time. They're too expensive and people don't really seem to want them. You're listening to Motley Full Money talking with Bryce Hoffman. His book is American icon, Alan Malali, and the Fight to Save Ford Motor Company. Before we wrap up with a round of buy-seller hold, let me ask you one of the questions that I asked Alan Malali when I interviewed him a couple of years ago.

A couple of years ago. What was the first car you owned? The first car I owned was a Ford. See, now that's great because it was actually a Ford. When I asked Malali that question, I think I may have caught him off guard because even, even, though he was CEO of Ford at the time that I asked him the question, unfortunately for him, his first car that he bought was a Chevy, or that he owned anyway. And I think that's thrown a little bit. But, you know, he's so on message that by the end of his answer, we were back to talking about Ford again. I'm not really sure how he pulled that off. Well, you know, Chris, I can remember

the first time I met Alan at the press conference in Dearborn when Bill Ford announced that he was stepping aside and turning the company's day-to-day operations over to Malalley. And one of my colleagues asked him, what type of car do you drive? And without even pausing, he said, Alexis. And there were audible gasps in the room, and he said, because it's the best car in the world. And there were more gasps, including by Bill Ford, who kind of chuckled and said, yeah, it's being keyed as we speak. But then Malawi said, and you know what, we're going to make Ford's every bit as good, if not better. And, you know, he, a big part of his strategy about not sugar-coated your mistakes and your shortcomings, but planting the flag about where you want to go and

talking about how you're going to get there. Imagine that. All right, we will wrap up with a round of buy-seller hold. As we discussed earlier, this was Malali's baby when he was at Boeing, but it is grounded for the moment. Buy-Seller Hold, the future of the Dreamliner 787. I think buy in the long term, because I think that they will ultimately get it right, but I think it's going to have a lot of issues between now and then.

It's got a relationship with most of the major automakers. Buy seller hold the future of Sirius XM satellite radio. Listening to Sirius, I think that if you look at some of the technological advancements that are happening right now, GM just announced that they're going to put high-speed internet in their automobiles over the next year or so. That's going to make it easy to do things that are a lot less cost-effective, I mean a lot less costly than Sirius, like Sportify or Pandora in your car. That said, I'm sure that Sirius has got people working to come up with an evolutionary business model that will keep

them in the game. And finally, this is an automotive technology that frankly scares me. Buy seller hold, Google's driverless cars. Oh, believe me, I'm going to double up on insurance when those things hit the road in the mass market. The Wall Street Journal, named it one of the best business books of 2012. It is American icon, Alan Malali, and the Fight to Save Ford Motor Company. It is available everywhere in paperback. Bryce Hoffman, thanks so much for being here. Thank you, Chris. That's it for this edition of Motley Fool Money. To check out the Motley Fool's list of the 25 best companies in America, go to Fool25.com. The show is mixed by Rick Engdahl. Our engineer is Steve Broido. Our producer is Matt Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.