German auto giant DaimlerChrysler (NYSE:DCX) reported decent results this morning in all divisions except Chrysler. Chrysler was said to be "close to breakeven before restructuring expenses." Translated, that means in 2003 Chrysler lost money, sold fewer cars than the year before, and incurred restructuring charges of over $500 million.
The good news at Chrysler is that the division managed third- and fourth-quarter profits. Wow, two straight quarters of profits. Could we have a trend?
Apparently, any improvement at Chrysler is reason for celebration. Daimler also announced that Chrysler's chief operating officer will assume responsibility for the Mercedes Car Group. Let me get this straight: The guy next in line at Mercedes turned in a higher profit than in 2002, even while incurring the expenses of an upcoming major model launch. No promotion for you!
Here's another pearl for shareholders trying to figure that one out: "DaimlerChrysler is striving to achieve a slight increase in operating profit in 2004." Talk about lowering the bar.
The MBA's out there will love this: "The company foresees significantly improved earnings in 2005 and 2006, when the new vehicles from the divisions' current product offensives will all be available." This isn't the ordinary dodge (pun intended) of, "Wait until next year." This is the old "Boy, can we see clearly over the hill and down the lane for two to three years."
Before buying DaimlerChrysler, investors might also want to consider a few things. Net debt stands at almost $80 billion, and the stock trades at a forward earnings multiple of 13. Compare that to Toyota (NYSE:TM) (as Rich Smith did recently), with a current earnings multiple of 13, strong sales and profits, and net debt of $54 billion. Honda (NYSE:HMC) sells at a mere nine times earnings and has a net debt of only $16.7 billion.
Still want to buy American? Global heavyweight General Motors (NYSE:GM) sells for 10 times current earnings and carries a net debt of $251 billion. Boy, that's a lot of debt. Global No. 3 Ford (NYSE:F) trades at nine times forward earnings and boasts net debt of $158 billion.
So, maybe these two make Daimler look pretty good -- at least from a balance sheet perspective. But not even that crowd can make it look cheap, much less justify the logic of putting a two-quarter-profit-at-Chrysler COO in charge of Mercedes.
Visit The Motley Fool discussion boards to discuss DaimlerChrysler with other investors.
W.D. Crotty does not own stock in any of the companies mentioned. W.D. has his MBA and is looking for a million-dollar-a-year job with a car. He will settle for a 1986 Lincoln -- as long as the leather is not torn.
