Dear Mr. Berko:

Do you think Ford Motor Co. is going to declare bankruptcy because the stock is trading at $10? It seems that Ford’s 44-year-old chairman, William Ford Jr., lacks both the skills to manage this company and the respect of its top management, even though he holds prominent civic positions and is a Princeton University graduate.

I’d like to buy $20,000 of the Ford Motor Credit Co. 6.4 percent bonds that come due in November 2004. Do you think this is a safe investment considering Ford’s immense debt? I can assume some risk, and I like the high short-term yield. What is your opinion of William Ford Jr. and Ford stock? I would like to take a gamble and buy 2,000 shares. Do you think this would be a good gamble?

H.O., Mount Clemens, Mich.

Dear H.O.:

William Ford Jr. has held a few positions at Ford Motor Co. (F-$10) over the past 12 years. He completed each of his tasks with modest mediocrity. Yes, he’s vice president of the Detroit Lions, chairman of the Henry Ford Museum and chairman of the Detroit Renaissance Foundation. His name is Ford, and many folks in the Motor City like to rub shoulders with a Ford. However, not enough of them want to buy a Ford.

This year marks the 100th anniversary of Ford Motor Co. and it was supposed to be a milestone. In January, William, who was unenthusiastically elected chairman and chief executive officer by the Ford board of directors, declared, “When people look back on 2003, I want them to remember it as a turning point.”

William is not the kid for the job, and Ford’s prospects get darker by the day. Second-quarter production is down 20 percent from last year, market share is falling and Ford’s debt rating is just a mote above junk. Nervous investors pushed Ford stock to an 11-year low of $6.58, a long way from a few years ago when Ford traded proudly in the high $60s.

There are troubling stories of infighting, controversy and intense dissatisfaction in the board room. Morale is suffering and there is palpable friction between many top lieutenants. William is having trouble finding the right talent as efforts to improve automobile quality have collapsed. The April edition of Consumer Reports rated Ford last in reliability.

Yes, Ford has more than $160 billion in debt. However, the vast portion of that debt belongs to Ford Motor Credit Co., a nicely profitable division that is backed by receivables.   No, Ford is far, far from even thinking of declaring bankruptcy. The company has more than $25 billion in cash and the average maturity of its bonded debt is a very comfortable 27 years. So there is no pressure from creditors. If there is a liquidity crisis, which is doubtful, the company could sell its Hertz rental unit or tap into its $8 billion credit line.

Though Ford’s bond rating is BBB-, Ford Motor Credit’s is a solid BBB. So, I’d be comfortable owning the Ford Motor Credit 6.40 percent bonds due Nov. 22, 2004, and priced at $100. They are short-term bonds, asset-backed and extremely liquid.

Yes, Ford is a mess. It has a pension fund deficit of about $6.75 a share and its European operations need fine-tuning. Domestic competition is especially intense. The company could easily lose money this year. The chairman announced in January that Ford would earn $1.3 billion, but the 40-cent dividend may be cut.

As I’ve said before, the best time to buy a stock is when no one else wants to own it. I think this holds true for Ford. That’s why the bonds have a yield of 6.4 percent, which is a handsome return for 18 months, and that’s why the common stock trades at $10, which I consider attractive for risk-tolerant investors. Buy both, and I think that by year’s end, you will have a smile a mile wide on your face.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or visit his Web site at www.berkoradio.com.