If You Can Find a Better Stock, Buy It by Jay Palmer
Summary: Barron's says the new Daimler, sans Chrysler, is a bargain (see title). In its Chrysler purchase, Cerberus Capital Management takes over responsibility for the company's almost $18 billion in unfunded medical benefits. Daimler will now make its money on its Mercedes-Benz luxury line, and its trucks unit (Mercedes/Freightliner) -- the world's biggest. Mercedes made €792 million in Q1 2007, vs. a €735 loss a year ago. Truck profits were up to €528 million from €422 million. Ex-Chrysler, Daimler runs at an 8% margin, which could go higher if management follows through on its commitment to unlock value. Many new models are set to share components, boosting profitability. CEO Dieter Zetsche knows trucks, having headed Freightliner. Despite Zetsche's insistence to the contrary, Chrysler workers could try suing Daimler if things there go badly. But if Cerberus follows through on its promise of making Chrysler profitable, the issue is moot, and Daimler could actually reap more from its remaining 20% stake than it did in the nine years it owned the company. Analysts argue shares are worth over $100.
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Conference call transcript: DaimlerChrysler Q1 2007