DaimlerChrysler Scales Back Forecasts

S T U T T G A R T, Germany, Feb. 26 -- Massive bleeding at its U.S.-based auto unit hammered fourth-quarter earnings at DaimlerChrysler, the company said today in reporting $269 million in red ink — the first quarterly loss for the auto giant since Chrysler merged with Daimler-Benz in 1998.

DaimlerChrysler also warned that revenue and operating profitfor the company as a whole would tumble this year.

The world's fifth biggest automaker reported today it lost$269 million for the October-December period.

That included losses at the troubled U.S. division of $1.3 billion, more than double the $512 million loss for the third quarter.

"The situation in the United States has deteriorated dramatically," said chief executive Juergen Schrempp, who has come under pressure from shareholder lawsuits and calls to resign because of the company's sagging bottom line.

"In addition, there were internal problems, which we now have to resolve. There is no hiding the fact," Schrempp said.

While acknowledging that past management mistakes contributed tothe setbacks, Schrempp remained upbeat about his ability to turnthings around, adding, "In the last few months, we have proved wecan handle the situation."

DaimlerChrysler said it expects the Chrysler unit will return toprofitability by 2002.

Cost-cutting Measures

Meanwhile, DaimlerChrysler also announced today that its 34percent-owned Mitsubishi Motors unit would slash 9,500 jobs as it reduces production capacity.

Investors pushed DaimlerChrysler's stock price down $0.99 or 2.03 percent lower to $47.81 in morning trading on Wall Street as they digested the barrage of financial forecasts and lengthy restructuring plans.

DaimlerChrysler said a restructuring plan, which includes a detailed timeline for improvements and targets for operating profits as well as greater parts sharing between Mercedes-Benz, Chrysler and Mitsubishi, should generate 7.2 billion euros in extra revenue and savings through 2003 — and bring the Chrysler arm back into the black.