Discuss the following:
On January 11, 2001, the New York Times wrote, "The company's Chrysler division, which lost United States market share in 2000 to foreign competitors because of its aging products, is expected to post a loss of $1.25 billion in the fourth quarter after a third-quarter loss of $512 million."
Source: New York Times
Based on your own research, how has each organization's and each country's cultural factors led to the low performance in the Chrysler division? How have their actions resulted in dissolution of the merger? How do you think Daimler's HRL could have done a better job of conducting due diligence about the two companies' cultural differences across Atlantic to make sure each division was successful?
DaimlerChrysler Says Cash Flow Has Eroded, and Its Credit Slides
Published: January 11, 2001
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DETROIT, Jan. 10— DaimlerChrysler A.G. told analysts today that its cash flow situation had deteriorated in recent months, with its industrial net cash reserves dropping to zero in the fourth quarter.
DaimlerChrysler, hit by heavy losses at its Chrysler brands, told analysts at the North American International Auto Show here that its gross liquidity fell to 12 billion euros in December from 14.8 billion euros in September. Net liquidity at its industrial business has fallen to zero from about 6 billion euros since September, Manfred Gentz, the company's chief financial officer, told the analysts.
Worries about DaimlerChrysler's cash flow position have been mounting, and some analysts fear its deterioration may jeopardize dividend payments. Mr. Gentz vaguely indicated, however, that the company would stick to a ''stable'' dividend policy, the analysts said.
The company's Chrysler division, which lost United States market share in 2000 to foreign competitors because of its aging products, is expected to post a loss of $1.25 billion in the fourth quarter after a third-quarter loss of $512 million.
DaimlerChrysler also said today that it was prepared to sell about $7.1 billion of global bonds, $3.1 billion more than it originally planned. The automaker is expected to pay at least half a percentage point more in interest than the General Motors Corporation did on similar bonds just last week.
The DaimlerChrysler sale, expected on Thursday and coming in a week when investors are absorbing an expected $34 billion or more of corporate and agency bonds, is the largest corporate bond sale since British Telecommunications P.L.C. sold $10 billion of debt on Dec. 5.
Largely because of the troubles affecting the Chrysler division, DaimlerChrysler is being forced to offer yield premiums that are more appropriate for debt-ridden European telecommunications companies despite having the same credit rating as G.M. and the Ford Motor Company.
''The spreads are telling you that the market views DaimlerChrysler's credit quality as worse,'' said Marvin Behm, an automotive analyst at the credit rating agency Fitch. ''We don't typically see markets move 50 basis points in a week, so from an investor standpoint there is a clear credit penalty.''