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Chrysler Net Up 8% in 4th Quarter

February 05, 1988|From Times Wire Services

NEW YORK — Chrysler Corp. reported Thursday that its fourth-quarter profit rose 8% from a year earlier, but, in what has become a well-established pattern, Wall Street was dissatisfied, and the car maker's stock fell $1 to $26 a share.

Although profit climbed $26 million to $350.2 million--the company's second-best quarter ever--analysts said they had expected earnings to weigh in near the $400-million level.

Chrysler Treasurer Fred Zuckerman, explaining the lower-than-expected fourth-quarter earnings, said industry analysts had failed to take into account the cost of introducing the new Dodge Dynasty and New Yorker Landau models. Also adding to unexpected costs was the launch of the Eagle Premier, which had been developed by American Motors Corp.

Zuckerman contradicted published reports that AMC contributed $125 million to 1987 earnings, saying the Chrysler unit only broke even last year.

The nation's third-largest auto maker also announced that its board had adopted a "poison pill" defense against takeovers, but Chairman Lee A. Iacocca said the measure was not prompted by any moves against the company.

Revenue totaled a record $7.67 billion, a 29.1% surge over the $5.94 billion a year earlier.

For the full year, Chrysler had a profit of $1.29 billion, down 7.1% from $1.39 billion in 1986. But excluding 1986's one-time gain of $131.9 million from the sale of Chrysler's interest in the French auto maker Peugeot, profit was up.

Volatility Prompts Move

Revenue for the year rose 16.3% to $26.28 billion from $22.59 billion.

In a meeting before the earnings were announced, the Detroit-based company's board voted to install a shareholder-rights plan to provide a defense against any unwanted takeover attempt.

Commonly known as a poison pill plan, it would make a hostile bid prohibitively expensive by giving shareholders the right to buy stock in an acquiring company at a bargain price if the takeover was not supported by management.

Iacocca told reporters that Chrysler had not received any expression of interest in a merger or acquisition. Instead, he said, "we did it because of volatility in the market."

Hundreds of other companies have taken similar measures in recent years as a result of the wave of corporate acquisitions that has shaken up the business world.

Takeover bids slowed after October's stock market crash, but the pace has picked up in the new year following the drop in stock prices. The dollar's plunge also has made U.S. businesses tempting targets to some foreign companies.

The auto maker said its share of the U.S. car and truck market rose to 12.3% in 1987 from 11.7% in 1986. Chrysler's share of the truck market jumped to 15.9% in 1987 from 12.1% in 1986, largely because of the August, 1987, acquisition of American Motors Corp.

Other Chrysler acquisitions last year included Electrospace Systems Inc., a Richardson, Tex.-based high-technology defense contractor, and NFC Leasing Inc., Hinsdale, Ill., which leases and refurbishes computer equipment.

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