When the fossil was discovered, the scientists were perplexed by the jumble of adult and fetal-size bones. First they found small teeth, then ribs going the wrong way. The head-first postion of the fetus gave them the clue: land mamals are generally born head first, and marine mammals are born tail first.
Illustration courtesy John Klausmeyer and Bonnie Miljour/University of Michigan Museums of Natural History.
From the Upcoming ueue, submitted by Marilyn Terrell.
This story would be more interesting if there were more potential reasons for why the bones were found. Deciding that this is a missing link based on such a small amount of evidence mind boggling.
At any rate, the reason Ambulocetus is considered a whale ancestor is because of its skeletal morphology and dentition. It was, like hippos and crocodiles, a land animal that spent a great deal of time in the water. Some of its decendants probably resembled manatees & dugongs --- one could, I guess, call them "intermediate" species in that they are neither land animals nor as streamlined as cetaceans. However, palaeontology does not actually designate species as "intermediate." "Intermediate" implies that a species is working toward some goal, which is not the case.
Teeth are very useful for linking one species to another in the fossil record, simply because they don't change as "quickly" as bones do. This is why modern humans have problems with wisdom teeth. Ambulocetus has teeth rather similar to that of Basilosaurus, which was initially mistaken for a marine reptile (hence the name) until its own teeth were seen to be similar to today's orcas.
Eventually some of Ambulocetus' decendants found it difficult to get onto land to give birth. Those who tended to have "breech births" were more likely to have offspring who survived being born, and thus their genes were perpetuated. A condition that usually proves a liability on land can be an advantage in the water. (An example of a human problem that can be a boon is sickle-cell anemia. It can make one weak, but it can help one survive a case of malaria.
Don't use this "first cause" crap. There's no "first cause" for evolution either.