Daimler, which sold a majority of Chrysler to Cerberus last summer but retains a 19.1% stake, made headlines Friday by reporting Dearborn, Mich.-based Chrysler lost $2.9 billion from when the deal closed on Aug. 4 to the end of the third quarter. Chrysler under Cerberus has been guarded in releasing financial information, but Cerberus has said the unit was exceeding most of its financial targets.
Chrysler on Friday took issue with those numbers, saying in a statement on their password-protected media site that the company from an operating standpoint was profitable during that August to September period and in fact lost "significantly less than what was reported" during the full year. The company blamed the discrepancy on differences between U.S. GAAP accounting and international rules, specifically accounting for pension and restructuring charges.
The dispute is unlikely to go further than battling PR releases, but that does not make it insignificant. Chrysler is trying to change public perception that it is a money-losing afterthought in the global auto business, while Cerberus has come under fire from various media sources questioning the wisdom of its investment in the auto business. The last thing either party wants to do is read newspaper stories talking about multibillion dollar losses at Chrysler.
But unless Cerberus is powerful enough to change international accounting rules, this probably is not the last we have heard of financial disagreements between the two parties. - Lou Whiteman
See Reuters story reporting the Daimler results
See Daimler's financial release
See Dealwatch: Chrysler
Long-distance relationships can be difficult, especially international ones. Cerberus Capital Management LP and minority partner Daimler AG are learning that lesson the hard way as they squabble over profits and losses at jointly owned turnaround story Chrysler LLC.
