Ford CEO Alan Mulally, pictured with the 2011 Ford Focus, is credited with turning the company around. But analysts say the automaker still faces formidable challenges ahead.

MICHELE NORRIS, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Michele Norris.

MELISSA BLOCK, host:

And I'm Melissa Block.

Today, Ford Motor Company announced its 2010 yearly earnings. The company made $6.6 billion dollars in profits. That makes it Ford's most profitable year since 1999.

Despite the good news, the numbers were not quite as rosy as many industry analysts had hoped. The company's stock actually fell today, and as NPR's Sonari Glinton reports, Ford still has a long road ahead.

SONARI GLINTON: Imagine for a moment that car companies were movies and the earnings season was the Academy Awards. The Car-Oscar ceremony would probably go something like this.

Unidentified Man: The nominees are: General Motors, Ford Motor Company, and Toyota. And the envelope please? I can never get these things open. With more than $8 billion, the winner is Ford Motor Company of Dearborn, Michigan.

GLINTON: Then enter the happy CEO, Alan Mullaly.

Mr. ALAN MULLALY (Chief Executive Officer, Ford Motor Company): Oh it's fantastic.

GLINTON: That's probably how it would go, and it's sort of how it did when Ford announced its earnings today. Ford made over $8 billion before taxes and interest and about $6.6 billion after. That means Ford employees will get profit-sharing checks. And it means it's been the best year for the company in more than a decade. Again CEO Allan Mullaly speaking in an interview.

Mr. MULLALY: You think about back then and now, this is a complete transformation of Ford.

GLINTON: 1999 seems like a lifetime ago, and it was for the auto industry. It was before gas prices spiked, before the economic collapse and before the deep recession. But while the whole industry had a tough decade or so, things turned out worse for Ford's competitors.

Gary Bradshaw is a portfolio manager with Hodges Capital Management. He says Ford was able to capitalize on its competitor's misfortunes.

Mr. GARY BRADSHAW (Portfolio Manager, Hodges Capital Management): The consumer has come back in a big way. At the time that, you know, General Motors has stumped their toe by going into bankruptcy, and that's left a sour taste in the consumers mouth, and then the issues that Toyota had.

GLINTON: Bradshaw and others say Ford has been benefiting from a halo effect, scooping up customers that have fled the other automakers. They have streamlined, selling off foreign luxury brands and severely cutting dozens of vehicle brands. That reduced costs and added to the company's bottom line.

But, and there is a but, Ford still has some problems. For example, Ford needs to attract more customers overseas, especially in China, where it sold only a half million vehicles. And instead of taking the bankruptcy route, Ford went into debt, a lot of debt.

David Whiston is an investment analyst with Morning Star. He says that debt poses a problem.

Mr. DAVID WHISTON (Investment Analyst, Morning Star): Yes, their credit is less than ideal. And it's getting better, though, which is good. But it's not there yet. So they do pay a higher funding cost than, say, Toyota.

GLINTON: Ford executives say they expect to pay off the debt this year. All the U.S. car companies have debt, but Ford also has a problem that GM and Chrysler don't have: union negotiations.

Mr. GEORGE MAGLIANO (Analyst, HIS Automotive): Ford is the only company that does not have a no-strike clause.

GLINTON: George Magliano is an analyst with IHS Automotive. Because of deal cut with the government during bankruptcy, GM and Chrysler have no-strike clauses in their contracts with the United Auto Workers union. Magliano says Ford's profits could put it in a tough negotiating position.

Mr. MAGLIANO: It is paramount that they get this union contract nailed down and get it nailed down peaceably.

GLINTON: Meanwhile, the investor Gary Bradshaw say Ford faces another potential problem: higher gas prices.

Mr. BRADSHAW: And that's going to weigh heavy on the consumer's mind again. And will he be buying the new F150 trucks or the diesel trucks where, you know, they got profit margins?

GLINTON: Bradshaw and the analysts agree that Ford is on its way to health, that is if the economy doesn't get in the way.

Sonari Glinton, NPR News Detroit. Transcript provided by NPR, Copyright NPR.