We've heard the rumors and should expect an announcement/unveiling in the next few months.
The rumor is the C-segment car was killed but the CUV lives on. I think this is a big mistake, especially with the launch of the ILX.
I do think there's a market for a Lincoln compact sedan that uses the 1.6L EcoBoost used in the Fusion as standard equipment for a Lincolnized Focus, with the 2.0L as the upscale engine and exclusive AWD.
Is there any chance Ford could surprise us with such a car? The current Focus is underpowered for buyers looking for some added "go" and the ST lacks an automatic and has a "boy racer" look to it. Plus, launching with the 1.6L EB gives it a huge advantage in fuel economy over the Verano (fuel economy) and ILX (power).
Here's hoping Ford isn't dropping the ball.
EDIT: Unless Lincoln is secretly working on a new Mustang-platform small sedan. Then all is forgiven and it's time to salivate.