Big Looser Visteon Looking Beyond - "When Things Get Better We will Acquire Companies" - BG- Why Not Be Succesful With What You Own?

Chicago July 20, 2003; Jeremy Grant writing for The Financial Times reported that Visteon, the world's second-largest automotive parts supplier, said it was likely to start seeking acquisitions next year after conceding that it could not generate sufficient organic growth to expand its business away from reliance on Ford Motor Company, its biggest customer.

The Michigan-based company, whose shares fell 5 per cent on Friday after it reported a second-quarter loss, said that while it was currently studying a handful of small acquisition targets, mostly in Germany, these would not be sufficient to "grow business away" from Ford fast enough.

Dan Coulson, chief financial officer, said Visteon had its "hands full" with an ongoing restructuring and dealing with expected weakness in the industry for the rest of the year.

But he told the Financial Times: "Once we get a clearer picture on next year and beyond we'd like to be able to consider a more significant acquisition."

ArvinMeritor, another parts maker, earlier this month underscored the need for many parts suppliers to consolidate further by announcing a hostile bid for rival Dana Corporation. Dana has said it is likely to respond this week.

Most large US parts makers that for decades thrived by supplying a wide range of components to Detroit's "big three" are increasingly realising that to survive as Asian and European carmakers steal market share from Detroit, they must specialise and seek more business from those Asian and European carmakers.

At the same time, they have come under severe pressure from GM, Ford and DaimlerChrysler to cut costs.

Visteon was spun off from Ford two years ago and has gradually been winning business from non-Ford customers.

Rival Delphi has been doing the same with General Motors.

However, both companies are still vulnerable due to heavy exposure to their former parents.

GM and Ford reported weak second-quarter results last week due to production cuts amid tepid demand for new vehicles in the US and Europe, and continued use of profit-eroding financing incentives. Visteon declined to give an outlook for the third quarter, citing uncertainty over demand.

It reported a second-quarter loss of $167m, or minus $1.33 a share, due to getting out of the car-seating business, and lower vehicle production volume at Ford. Last year, Visteon made a profit of $72m, or 56 cents a share, in the same period.

LAST LINE: Editors Note- It always amazes me that big companies that lose lots of other peoples money have a need to take their corporate eyes off the ball, and look to acquire other companies instead of being profitable with what they already own (owe for). If Visteon's spin off from Ford could not be profitable by itself then the management and those who promised the moon are ripe for a stockholder law suit. Why this need to grow when they can't manage the company now. By way of full disclosure my family is a stock holder in Visteon and pretty pissed off with their financial results!