An Awkward Marriage By Jay Palmer
Highlighted companies: DaimlerChrysler (DCX)
Summary: Five years after the merger with Mercedes producer Daimler, 'Chrysler is a mess' -- last week it reported a $1.47 billion operating loss for the third quarter, and statements from executives at parent DaimlerChrysler suggest that Chrysler may be on the block. Among the problems: ongoing market share loss to Asian imports, higher fuel costs undermining sales of its popular larger vehicles, and the UAW's refusal to grant it the same wage and healthcare concession that GM and Ford received. DCX stock was one of the industry's top performers in 2004-5, but has traded flat in 2006 in the $50-55 range while nearly every other carmaker has seen significant stock gains. CEO Dieter Zetsche was tasked with turning around Chrysler but now may act to protect the more valuable and profitable Mercedes unit, which is ramping operating profits amidst a 10% improvement in productivity and increased sales of higher margin vehicles. Barron's bottom line: 'DaimlerChrysler shares are likely to be dead money right now. And they're likely to stay that way until definitive signs emerge of a Chrysler comeback or a corporate divorce.'
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