Analysts: Chrysler Still Has Uncertain Future (Manufacturing.net)

bumpy road that could include a future sale of part or all of the automaker.

Uncertain? That's the most optimistic statement I've seen in months!

a bumpy road that could include a future sale of part or all of the automaker.

And I would say the same for Ford, GM, Nissan, and all the others, too. Its just going to be tough for carmakers in the future, period.

a bumpy road that could include a future sale of part or all of the automaker.

All three in the US seem to be swirling the drain, with the ones farthest away heading down fastest. It's an interesting race...

mid-sized sedans, The Wall Street Journal reported Thursday. Under the proposed agreement, Nissan would make the sedans that Chrysler would sell under its own name, the report said.

This on top of the Nissan small car Chrysler is going to sell, and the Dodge pickup Nissan is going to sell. A tie-up with Nissan is looking more likely, methinks.

Well it may solve a Chrysler intermediate car problem for me, if Chrysler doesn't screw up the Nissan products with their changes. For example I don't like the Sebring (functionally) but I do like the Altima.

Chrysler has a slightly different ownership situation than the others. Cerberus is a rich man's hedge fund looking for short term profit, regardless of where it leaves Chrysler.

I keep seeing this claim, but when I took a brief look at Cerberus's portfolio, it seemed like they take on these companies and keep them. So I'll ask the same question now I asked a year ago: what has Cerberus ever sold? And (more importantly) what have they ever dismembered and sold as pieces?

Nobody answered last time I asked that.

But does what they do work (thinking Home Depot).

Bill Putney (To reply by e-mail, replace the last letter of the alphabet in my address with the letter 'x')

Hee's your answer.

Cerberus's Sharp-Toothed Ways Firm Has History Of Turnarounds Fueled by Cuts By Frank Ahrens Washington Post Staff Writer Tuesday, May 15, 2007; D01

In more than a decade of buying into down-and-out companies across three continents, Cerberus Capital Management has applied a similar strategy to most of its targets: cut, cut and cut some more.

Now Chrysler is set to join a list of acquisitions that includes long- haul trucker Fruehauf, Air Canada and lingerie maker Frederick's of Hollywood. Many of those companies have experienced turnarounds under Cerberus's slashing ways, but not without pain.

New York's Cerberus bought more than 600 struggling Albertsons supermarkets last year and laid off nearly 1,000 workers within months. Last fall, the firm bought the on-the-brink Blue Bird school bus manufacturer; earlier this month, Cerberus closed its Canadian bus plant and let go 130 workers. Cerberus bought a North Carolina textile company out of bankruptcy in 2004 and closed two mills within the year. It bought the Alamo and National car rental chains out of bankruptcy in 2004 and moved them from high-rent South Florida to more- affordable Tulsa.

Cerberus's sharp-toothed ways may be inspired by its namesake: Cerberus was the three-headed canine guardian of the gates of Hades in Greek mythology.

Cerberus the company maintains an even lower profile than its rivals, such as Providence Equity Partners, Blackstone Group and Washington's Carlyle Group. Cerberus has $25 billion under management and in funds and accounts. With just 200 of its own employees, Cerberus owns or has pieces of about 50 companies with more than 175,000 employees and a combined annual revenue of $60 billion, the company says.

The firm is run by financier Stephen Feinberg, who was a trader at Drexel Burnham Lambert in the 1980s, when the firm popularized the use of "junk bonds" for corporate takeovers. Former Treasury secretary John W. Snow was named chairman of Cerberus in October. Former vice president Dan Quayle is on the board.

Cerberus distinguishes itself from other private-equity firms by maintaining a staff of in-house operations executives. Meaning: When it takes over a company, it often doesn't have to recruit a new chief executive; it puts one of its own in place.

"This is a bit of an unusual transaction for them in that it does now make them very, very public," said Boston University law professor Charles Whitehead, who studies equity firms. "It's like the Japanese buying Pebble Beach -- if you want to get attention, this is the way to do it."

These are flush times for Cerberus and all of private equity. Moneyed investors seeking big payoffs have created an equity pool estimated at $500 billion, up from $8 billion at the beginning of the 1990s, according to the Columbia Business School.

Nearly $400 billion in private-equity transactions have taken place so far this year, nearly doubling the dollar amount by this point last year, Thomson Financial reported.

Investors are attracted to the high returns generated by equity funds. Among Cerberus's investors is the California State Teachers' Retirement System.

Generally, equity money seeks struggling industries where cuts can be made and profits quickly increased. Some firms seek to flip their companies soon after paring them to the bone. Others have a longer- term view, taking their annual guaranteed profit and helping turn around ailing companies.

Cerberus would not comment yesterday on its strategy but appears to be in an automotive buying cycle. Previously, the company passed through a fashion and retail stage by acquiring textile mills, Mervyns discount department store and Frederick's.

Cerberus bought 51 percent of GMAC, General Motors' financing unit, last year, and it owns auto parts maker Peguform Group in Germany and is trying to buy into troubled parts maker Delphi. Now, the buyout firm is set to add an entire automaker to its portfolio.

A look at Cerberus's track record with its previous acquisitions may indicate how it will treat Chrysler and raise the question: Under a Cerberus ownership, will one of Detroit's Big Three remain so, or will it become a substantially smaller automaker, more analogous in size to Mitsubishi than Ford?

Albertsons was a supermarket chain based in Boise, Idaho, that spread throughout the West. Hurt like all supermarket chains by Wal-Mart, the company's sales went flat and profits dropped. Cerberus joined supermarket chain SuperValu to buy 655 Albertsons stores in January

Cerberus went to work fast. In June 2006, nearly 200 Albertsons warehouse workers were laid off in Northern California. The next month, a number of Albertsons stores ended their costly online grocery- shopping services. In November, Cerberus sold 132 Albertsons in California and Nevada. A year later, Cerberus-owned Albertsons closed nine Colorado stores, laying off 750.

Shoppers have noticed improvements at Cerberus-owned Albertsons in Florida, the St. Petersburg Times reported last month, and the chain has installed efficient new registers, raised some prices and instituted systematic employee training for the first time.

In 2004, Cerberus targeted Mervyns, an underperforming chain owned by Target and squeezed by rivals such as Wal-Mart and Kmart.

Cerberus paid $1.7 billion for 257 Mervyns stores and started cutting. In September 2005, the company said it had decided to concentrate on California, exiting poorer markets in Michigan and Oklahoma. As a result, the company closed 62 stores and laid off 4,800 full- and part- time workers. Four months later, Mervyns pulled out of Washington state, closing 20 stores and letting go 880 full- and part-time workers, and closing stores in Oregon, as well.

Now, Mervyns is trimmed down to 189 stores, including four new stores opened in October in California, Texas and Arizona, the first since the Cerberus acquisition. Cerberus's Vanessa Castagna is chairman of Mervyns' board and said at the time that the company will continue to "expand in our core markets."

Staff writer Thomas Heath contributed to this report.

Good-bye Chrysler.

Thanks, but that answers a different question: it says their strategy for turning around ailing companies is to shrink the company until it's profitable. It doesn't say they're only looking for short-term profit, nor that they'll get Chrysler profitable and then sell it off.

Well at least Cerberus is consistent. Their bean counting approach has been cutting back at Air Canada, but they are increasingly losing business to newer rival Westjet who just formed an alliance with Southern. Under Cerberus Air Canada has even cut back on their Aeroplan points scheme, so much that people are starting to get out of it.

Do they see Chrysler's only value as a manufacturer of high profit trucks with a valuable dealership network to sell others cars?

I feel just the opposite. Nissan made the new Altima too big, from the late '90s model. Do they still put a four cylinder in the Altima?

On Aug 10, 10:23=A0am, "Count Floyd" wrote: =A0Nissan made the new Altima too big, from the late '90s model.

Not the coupe. I'd take one of these over the smaller ones, the Toyota, Saturn and Pontiac. Too small.

I had a 1993 Altima. Great inexpensive car. Then Nissan kept jazzing it up, adding frills, making it bigger and upping the price. It's no longer an inexpensive car thats a step above the no-frills cars. It's almost where the Maxima was market wise not that long ago.

Albertsons.

Steve B.

OK, reading the story... that's closer to the "buy and dismember" model than I was aware of previously (at least, the sale of some stores to SaveMart). On the other hand, they've also bought a couple of stores since then. The "buy and dismember" model I'm thinking of is more like Carl Icahn.

mid-sized sedans, The Wall Street Journal reported Thursday. Under the proposed agreement, Nissan would make the sedans that Chrysler would sell under its own name, the report said.

Nissan makes a decent small car. But Nissan can't build a truck to save their life. IT may indeed work.

You could equally well argue that as a private company, it has greater agility in times that demand rapid change. Who knows how it will pan out?