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Here's the story on how Daimler is taking over the whole show.
News Article: DaimlerChrysler To Revamp Board
<FONT SIZE=-1>By Todd Nissen</FONT>
DETROIT (Reuters) - DaimlerChrysler AG Friday will announce
the resignation of North American chief Thomas Stallkamp and a
new, smaller management board, a shake-up that has unnerved Wall
Street and sent the automaker's stock skidding to record lows.
The world's No. 5 automaker is scheduled to release the news
early Friday morning, sources familiar with the situation said.
A teleconference is also scheduled with Co-Chairman Robert
Eaton.
The popular Stallkamp, the No. 2 American behind Eaton, has
played a key role melding the German and U.S. operations since
the combination of Daimler-Benz and Chrysler last November.
Stallkamp is expected to leave by the end of this year in a move
analysts view as bad for the company as it struggles to merge
its German and American units.
The DaimlerChrysler supervisory board is scheduled to meet
in Frankfurt, Germany, Friday to review the plan to pare back
the company's management board to 13 from 17. It is the first
major restructuring since the Stuttgart-based automaker was
created last year in a $40 billion combination that ignited a
global consolidation in the auto industry.
Officials at DaimlerChrysler's Auburn Hills, Mich.
headquarters have declined to comment all week on speculation
about Stallkamp's resignation and reiterated that policy
Thursday. The 53-year-old executive canceled a scheduled meeting
with reporters in Washington D.C. Friday. He was unavailable to
comment Thursday.
U.S. investors drove DaimlerChrysler shares down $4 to a new
all-time low of $66.19, following a recommendation from Lehman
Brothers that investors buy <A
HREF=http://quicken.excite.com/investments/quotes/?symbol=F>Ford Motor Co.</A>
instead. The sell-off
followed declines in Europe, where shares dropped 3.13 percent
to 64.68 euros.
The expected departure of Stallkamp, who joined the former
Chrysler Corp. in 1980, is regarded as a bad sign by analysts
because it means losing his valued expertise.
Also, the move is seen as hurting morale among U.S.
employees, who already fear their supposed "merger of equals"
has amounted to a German takeover engineered by Juergen
Schrempp, Daimler's aggressive co-chairman. Several high-
profile former Chrysler executives have already left the
combined company since its creation in November. Eaton had
already said he would leave within three years of the deal.
It has also set off alarm bells with U.S. investors at a
time when the company is trying to woo them back. U.S. investors
now hold 25 percent of the company's outstanding shares, down
from 44 percent in November.
Stallkamp, who was president of the former Chrysler Corp.,
played a key role in rescuing the automaker by pioneering a new
system with suppliers that included them in vehicle development
earlier than before. The result was lower costs and improved
relations with component makers.
Greg Kagay, an analyst with Arnhold and S. Bleichroeder,
said there are big opportunities in the combined DaimlerChrysler
to cut costs using those same methods.
"It's a mystery why, if that's one of the key benefits of
the merger, they would kill off the person who personified that
benefit," he said.
But analysts have other worries beyond Stallkamp. Lehman
Brothers Thursday cut its earnings estimate and price targets
for DaimlerChrysler because of rising incentives in North
America, which contributes more than half of the automaker's
total profits.
In New York, Lehman Brothers analyst Nicholas Lobaccaro
urged investors to move into Ford due to earnings trends,
valuation, management stability and strategic direction.
In addition to light truck profit concerns, Kagay said there
are worries about where DaimlerChrysler is headed in the small
car market, where profit margins are slim.
Industry sources also said the management restructuring is
expected to occur this way: James Holden, now head of sales and
marketing for the North American brands, will take over
Stallkamp's role as president of <A
HREF=http://quicken.excite.com/investments/quotes/?symbol=DCX>DaimlerChrysler
Corp.</A>, the
North American subsidiary.
Latin American sales chief Theodor Cunningham, also from
Chrysler, will lose his seat on the streamlined board. Former
Daimler executives who stand to lose their place include
Personnel Chief Heiner Tropitzsch, Commercial Vehicles Divisions
Chief Kurt Lauk and Services Division head Klaus Mangold,
according to the German media.
Eaton and Chief Financial Officer Manfred Gentz will stay on
the new 13-member board. Germans are still expected to outnumber
Americans on the board, as they do now, but the ratio of Germans
to Americans is seen as staying about the same.
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