Can Ford pull off another earnings surprise?

If Apple Inc. (AAPL) is the tech darling, Ford Motor Co. (F) is the rough equivalent among Detroit automakers. Although this may be faint praise, Ford is the only one of the Big Three to refuse a government bailout and avoid bankruptcy protection. Still, investors are expecting Ford to report a second-quarter loss tomorrow, albeit a narrower one.

The company, led the past two years by CEO Alan Mulally, has repeatedly stated that it can weather the current crisis on its own. Under Mulally, Ford raised fresh capital in 2006, sold non-core brands, reduced its automotive debt by $10 billion this year and managed to get concessions from the UAW and suppliers. Meanwhile, it concentrated on improving the quality of its vehicles and investing in hybrid cars and other technologies to meet the different consumer preferences.

Even so, the recession in general and the hit to the car industry in particular have not made it easy. Sales have plummeted, suppliers have gone belly up (partly due to problems at rivals), and Ford's debt load is still a heavy $25.8 billion.

A few months ago, Ford shares surged after a favorable call by Goldman Sachs issued just days before the carmaker reported a better-than-expected first quarter. Now the question is what's to come on Thursday.

According to Bloomberg estimates, Ford is expected to report a loss of 53 cents per share, smaller than the 62 cents a share loss it recorded in the same period last year. It would be its fifth loss in a row. Analysts believe that if Ford beats estimates, shares could surge again, which could pave the way for a possible share sale to reduce debt. Of course, the equity offering would have a dilution effect, which some analysts peg at 20 percent to current stock holders. Ford acted similarly after reporting the first quarter when it sold nearly 350 million shares and raised about $1.6 billion.

Mulally is still trying to raise money in other ways, including selling Ford's Volvo unit, but is it enough to help Ford shrink its massive debt in the face of shrinking sales?

While Ford plans on increasing production this summer by 10 percent, auto sales have not seen a turnaround yet, nor do analysts expect them to. Still, Ford managed to grab market share from flailing rivals even as it posted an 11 percent decline in sales in June. It will be more interesting to see if Ford can beat the revenue number, currently pegged at $24.71 billion according to Thomson Reuters.

While there's almost no doubt Ford will post a loss, investors will also want to see tomorrow whether Ford is still on track with its overall restructuring plan aimed at operating profitably in a smaller U.S. market. Also, after burning through $3.7 billion in the first quarter and ending March with $21.3 billion in cash, investors will want to see a lower cash burn rate. Finally, they will be eager to hear Ford's outlook on the economy, the car industry and the company. Does it still expect the economy to rebound in the second half of the year? Does it see gains from the recent cash-for-clunkers bill? Does it still expect to return to profitability by 2011?

While Ford shares are up about two percent today to around $6.32, it's possible Ford may not live up to the raised expectations. Reading articles and stories around the Web it's clear expectations are high. Perhaps too high.

Disclosure: Long Ford.

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