Fork in Road for DaimlerChrysler
D E T R O I T, Feb. 24 -- Already versed in battling back from bankruptcy's brink, DaimlerChrysler AG's Chrysler unit stands ready to tell the world how it hopes to stem its latest, troubling tide of red ink.
"The issue is what are people's expectations," said StephenReitman, a London-based analyst with Merrill Lynch. "If people areexpecting a golden bullet that immediately leads to a cure, they'regoing to be disappointed. Clearly, the issues are complicated."
Chrysler will unveil Monday what Reitman calls its "road map torecovery," hoping to quell claims by some that the company's woesshow the 1998 deal that joined Germany-based Daimler-Benz AG andthe American Chrysler Corp. hasn't lived up to its promise.
"We have to fix the problem at Chrysler, and we will," DieterZetsche, installed in November as Chrysler's president, chiefexecutive and the turnaround bid's point man, said recently.
Did Job Cuts Go Far Enough?
Chrysler has already revealed some of its turnaround package. Itplans to cut 26,000 jobs — one-fifth of its workforce — over thenext three years, though some analysts question whether the companyslashed deep enough.
Chrysler also plans to close six plants, is squeezing suppliersto cut prices by as much as 15 percent and looks to trimpotentially hundreds of millions of dollars in dealershipsubsidies.
The automaker will fill in the gaps Monday, including some wordon the comeback's cost, which many of the industry's watchersenvision could reach as much as $6 billion. Chrysler will alsoreveal the extent of its fourth-quarter losses, expected to be morethan twice the $512 million in red ink Chrysler posted for theprevious three months.
DaimlerChrysler has insisted it has no plans to spin off or sellChrysler but still perceives vulnerability, asking Deutsche Bank —the automaker's largest shareholder — to help craft a defensestrategy against a rival's possible takeover bid.
Prudential Securities' Mike Bruynesteyn believes Chrysler couldbe back in the black sometime next year — but nowhere near 1998 or1999 pretax operating profits that reached $5 billion.
