Chrysler Says Bye Daimler and Leaves it With $2 Billion First Quarter Loss

Daimler: Sorry dear Chrysler but this is it. I haverollout of new vehicles to increase its sales. To
sold you to the three headed dog Cerberus.start off its recovery plan it has launched recently
Chrysler: Its ok, Daimler dear I perfectlythe Dodge Avenger sedan and will be introducing
understand…and by the way would you be sonew minivans by fall.
sweet and take care of my $2 billion first-quarterDespite the first quarter losses that Chrysler has
loss?obtain, DaimlerChrysler’s net profit for
Daimler: Ok dear but remember I have the goodJanuary through March have double to $2.6 billion
end of the deal, ok?which simply shows a turnaround of its reviving
Chrysler: Of course dear…Mercedes-Benz luxury car-making division not to
The sale of Chrysler has ended up like a comedymention the additional earnings that
skit. Reports have cited that CEO Zetsche isDaimlerChrysler gets from its holding in the
saddened by the split of DaimlerChrysler, sayingaerospace company EADS.
that the Auburn Hills automaker did also contributeUebber said that company’s earnings for
to Daimler and was not always reporting losses.2007 would be slightly above $9 billion that is
But with the present $2 billion first quarter lossbefore interest and taxes however the yearly net
that Chrysler has reported, will CEO Zetsche stillprofit would still be undercut by costs related to
think better of Chrysler?Chrysler sale. And estimating those costs it will
Despite the loss that Chrysler has again incurred itprobably reach between $4 billion and $5 billion.
is still very positive that it will be able toDaimlerChrysler the producer of top of the line
break-even for the rest of the year. It can beMercedes 240D parts has also announced that it
noted that Chrysler has previously reported a $1.2will be selling an 80.1 percent stake in
billion resulting from the restructuring programChrysler’s industrial and financial operations to
that the automaker is implementing. The said lossCerberus Capital Management for $7.4 billion which
was reported last February 14, the very samewill mostly go into Chrysler’s operations. The
day that CEO Zetsche has announced thatdeal is expected to end in the third quarter.
Chrysler is up for sale.Will Chrysler gain any benefits from the sale?
DaimlerChrysler Chief Financial Officer BodoChrysler as a would-be privately owned business
Uebber has forecasted a $2.1 billion full-year losswill be shielded from the impatience of the financial
for Chrysler that is before interest and taxes.markets and on their focus on short-term results.
The forecast was announced during aBut according to CEO Tom LaSorda despite the
teleconference with reporters and financialnew benefits and advantages that Chrysler will
analysts. However analysts have a different viewobtain from its new owner, the company would
and considered the forecast stating a bigstill strive hard to improve its performance.
improvement in Chrysler’s earnings in theChrysler has reported first quarter loss before
current quarter as well as the second half of theinterest and taxes compares with a $857 profit
2007 as too much to expect.for the January-March quarter of 2006, before
As a matter of fact, according to New-Yorkthe continuously increasing gas prices began
based analysts Brad Rubin at investment bankaffecting the demand for its vehicles. Sadly for
BNP-Paribas, "I think that's overly optimistic. I thinkChrysler that trend has continued in the quarter
it's going to be very difficult."just ended resulting to an 8 percent decline in the
It is no secret that Chrysler is depending on thesales of Chrysler, Dodge, and Jeep vehicles.