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Profit concerns hit Daimler
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January 10, 2002: 9:26 a.m. ET
DaimlerChrysler shares plunge on concern automaker may miss 2002 target
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LONDON (CNN) - DaimlerChrysler's shares plunged on Thursday after the company said it could not guarantee the U.S. unit would break even this year.
Chrysler's Chief Executive Dieter Zetsche told analysts at the Detroit auto show on Wednesday that Chrysler still hopes to meet its profit target for 2002.
But he said the target will be difficult to meet because of an anticipated drop in sales and high customer incentive levels in the North American market.
DaimlerChrysler, the world's third largest automaker, said on January 4 it was on track to make an adjusted profit of $1.07 billion in 2001, but did not update its guidance for 2002 which called for the Chrysler unit to break even.
Analyst believe those comments have led to speculation the company may be forced to revise it guidance for 2002 when it details this year's result next month.
"My hunch is they will drop their guidance," a London-based auto analyst told Reuters.
"It is just a shame they didn't get it out of the way when they spoke to auto analyst yesterday. Now, creating confusion looks like a management that isn't quite on top of things."
Merrill Lynch issued a note on Thursday stating it is still possible for Chrysler to break even in 2002. But it added: "Given that Chrysler is unlikely to meet its revenue objectives, we believe this result will have to be achieved through accelerated cost cutting."
DaimlerChrysler shares were down about 3 percent in midday trading in Frankfurt. 
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