Marchionne the miracle worker

(Fortune) -- Fiat-Chrysler CEO Sergio Marchionne has shown himself capable of something few other Chrysler CEOs have been able to do: He got Chrysler to turn a profit.

To be sure, it was only an operating profit for the first quarter and a small one at that: $143 million. Net income, which is not much used as an auto industry measuring stick these days, dipped into $197 million.

And the numbers might not look so robust if Chrysler were a public company instead of a private one and legally required to provide more financial data.

Much of its revenue came from fleet sales, which are notorious for weakening brands and destroying residual values. And Chrysler did not provide the detail behind the numbers that would indicate, for example, whether it was boosting short-term results at the expense of long-term investments in new models.

But cash flow was strongly positive, and Chrysler now has $9.8 billion in the bank. Given that auto sales are slowly recovering this year, that should be enough to keep it out of danger for now.

Fiat, the other auto company that Marchionne runs, wasn't so fortunate. It reported a net loss of $33.6 million, a big improvement from a year earlier but a bit worse than analysts expected.

But it is time for the rest of Detroit, which has regarded Marchionne as something of a kook and a carnival act, to recalibrate. Chrysler's first-quarter bump came when most industry seers had written off the automaker.

Their analysis was simple: Chrysler had no new models to lure buyers into dealer showrooms, Fiat wasn't a respectable partner, and a resurgent Ford would eat its lunch.

Nor did Marchionne's personal style resonate with the local wisemen. How many other CEOs, after all, wear baggy sweaters, shun the press and look as if they are perpetually several weeks late for their next haircut.

Now however, Marchionne has shown himself to be a shrewd conserver of Chrysler's limited resources and a man of his word. He promised profitable results despite a chorus of naysayers and he achieved them.

But Marchionne's long term strategy for Chrysler remains a big question-mark:

-- He still faces a nearly two-year lag before the first products of the Chrysler-Fiat partnership go on sale.

-- Not many people believe that Chrysler's tired brands, with the exception of Jeep, can be revived regardless of how much time, energy, and money is invested in them.

-- His five-year projections for unit sales and market share still look absurdly optimistic.

-- And it has yet to be seen whether Italian engineers and executives of Fiat can work any better with their American counterparts than the Germans of Daimler-Benz could. Differences between the two cultures are widely blamed for sinking the ill-fated merger of Daimler and Chrysler.

But Sergio Marchionne has a bit of wind at his back now. The new heavy duty Ram pickup has provided a little momentum, and the 2011 Jeep Grand Cherokee -- designed with Mercedes-Benz -- is due to go on sale soon. (In a typical move, he held the new Jeep out of the New York auto show in April to avoid eroding the last remaining sales of the old Jeep. Industry standard practice means nothing to Marchionne.)

There are many more acts to come in this melodrama. But as an executive of a competing European automaker said, when asked about Marchionne, "We never underestimate him."