Word: chryslers
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Then again, he might just actually bag the big prize, take Chrysler private for a few years, then sell it back to the public for a hefty profit. Can he truly finance the buy? In addition to the money he expects to draw from Chrysler's reserve fund, his purchase plan calls for $3.5 billion from other investors and $10.7 billion in bank loans and other borrowing. Kerkorian's people also hint that some of the money to buy Chrysler might come from foreign auto companies. In the immediate wake of the deal offer, however, none has shown the cash...
...which could be great news for shareholders. What Chrysler and its employees stand to gain is another question. Since 1990 the company has made a tremendous turnaround, streamlining its design and manufacturing process to become the most profitable U.S. automaker. It also shed nonessential businesses like Gulfstream corporate aircraft, acquired in the 1980s under Iacocca. For 1994, Chrysler reported a record profit of $3.7 billion on revenues of $52 billion. Dodge Ram pickup trucks, Cirrus sedans and the Jeep Grand Cherokee were established hits, and promising new products like the Neon had come on market. Toyota engineers even went...
...same, just one day after Kerkorian's bid was made public, the company reported a 37% decline in earnings for the first three months of this year. Chrysler execs blamed high launch costs for its redesigned minivan and the $115 million expense to make free repairs on a faulty rear-door latch on older minivans--as well as a 7.2% decline in sales. Consumer Reports has grumbled about reliability problems on the 1995 Jeep Grand Cherokee and the Dodge Intrepid. And competition is getting tougher in the minivan, pickup and sport-utility fields that made Chrysler's revamped reputation. Though...
...Among Chrysler's top managers, some of whom question the wisdom of decisions Iacocca made for the company when he ran it, there is grumbling now that their former boss, susceptible to Kerkorian's unwholesome charms, is putting the company in jeopardy to satisfy his own ambition. "They are shocked and pissed,'' says one board member. "It's '80s greed vs. '90s forward-thinking management. Iacocca's involvement is really getting under people's skin.'' Certainly there's a prospect of money in the deal for him. For all his wealth-$200 million at last estimate-Iacocca has never been...
...while money is part of it, the deal can be fully understood only by laying the spreadsheets over a psychoanalyst's couch. For Iacocca, triumph followed by setbacks and then vindication has been a lifelong theme. "After Chrysler's bailout," says a close associate of Iacocca's, "the Secretary of the Treasury saw him arriving at a football game in his private jet. He called him and told him to get rid of the plane. Lee did, but then turned around and bought Gulfstream. Don't get mad, get even. That's pure Lee.'' His best-selling autobiography opens with...