Cost-cut plans send DCX stock to 6-year high

November 17, 2006

BY KATIE MERX | FREE PRESS BUSINESS WRITER

Shares of DaimlerChrysler AG hit their highest point on the New York Stock Exchange in more than six years Thursday, closing at $61.97, up $1.12 on the day.

Analysts speculated that the stock price is climbing on anticipation that the automaker will either cut costs or divest itself of its North American division.

"I think it's up over expectations that they'll decide to dump Chrysler," said Bradley Rubin, an auto analyst at BNP Paribas in New York City. "I think the company is getting a lot of pressure from the board to fix it quickly or just dump it."

Chrysler lost $1.5 billion in the third quarter and is expected to finish the year with a $1.2-billion loss, following a shift away from the large trucks and SUVs that have long been its bread and butter. Chrysler is working on a business optimization plan that includes cutting as much as $1,000 from the cost of every vehicle.

Bank of America analyst Ronald A. Tadross said it was cost reductions -- not a sale -- that convinced him to boost his price target for DaimlerChrysler. Tadross increased his share price forecast to $58 from $49 to reflect an expected $2.5 billion in restructuring savings from 2008 to 2010 at Chrysle