REPORT: Marchionne thinks Chrysler could go public in 30 months
Analysts have been wondering when Chrysler would go public, and new CEO Sergio Marchionne has an answer: not soon. Some have speculated that Chrysler shares would be available on the stock exchange by the end of 2010, but Automotive News is reporting that Marchionne is giving a timetable of "not sooner than 2½ years." Marchionne obviously wants to hold off on going public until he and Chrysler's board of directors feel the company will command the appropriate value.
Reporters also asked Marchionne in a conference call when he felt Chrysler would be profitable. The Fiat/Chrysler CEO pointed out that he didn't feel such speculation was a good idea considering the fact that Chrysler has yet to have a post-bankruptcy board meeting. Good point. Chrysler's board of directors will be meeting on July 29.
Marchionne did, however, say that Chrysler would "generate healthy profit margins" once US auto sales hit 13-14 million units per year; something he doesn't expect to happen before 2011.
[Source: Automotive News - Sub. Req. | Photo Source: Tiziana Fabi/Getty/AFP]
Reader Comments (Page 1 of 1)
Gary 11:08AM (7/23/2009)
Okay, let's see what all the "experts" on the Internet have to say.
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aa[ro]n 11:10AM (7/23/2009)
yeah me too! since everyone knows everything & all
zamafir 11:48AM (7/23/2009)
sounds to me like he's an expert, and someone who has a much better fundamental understanding of running a business then capt home depot. Its encouraging to hear automotive execs being honest.
HotRodzNKustoms 11:16AM (7/23/2009)
Nothing wrong with taking your time to try to do things right.
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Rick C. 1:55PM (7/23/2009)
I admire the longer term thinking, but I expected him to project out longer, a more conservative, less cowboy approach. Anyone who does not practice the American educated MBA doctrine of 'short term counts, screw the future' has my vote of confidence. More thinking along his lines might have averted the broader mess we currently face.
HotRodzNKustoms 3:26PM (7/23/2009)
Just keep in mind the board of directors, who are the real bosses, have not even met yet. So if he says anything substantial at the moment he could be forced to eat his words.
Alex 11:18AM (7/23/2009)
Not that I am any sort of an expert, but it seems like a sound plan. Why go public until you have a line-up of fresh and (hopefully) desirable vehicles?
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Allen 11:24AM (7/23/2009)
Agreed, the goal should be to do things right, not quickly. If nothing else, this improves my confidence in Marchionne.
why not the LS2LS7? 11:23AM (7/23/2009)
Ahh, the new version of success, make your company look good so you can foist it off on the public as rapidly as possible and recoup your investment.
Think of what FIAT is saying here. They are the current owners of the company. They're saying they only plan on owning this for a short time. Why is that? If the company is a successful venture, the profits go to the owners. So why does FIAT want to sell the shares off? Sounds like a statement of poor confidence in the long-term value of the company.
When a company goes public or talks about going public, I always remember that the people selling ownership in the company are the current owners. If the current owners in the company are selling their stake, why would I want to buy it? They have the ultimate knowledge of the value of the company and they think trading it for cash is a smart move?
And yes, I went public with a company before, a tech company. It was not a good experience for the company.
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HotRodzNKustoms 11:31AM (7/23/2009)
Two issues I take with what you say here.
1. Success by IPO was popularized in the tech boom. I lost money with a guy with that strategy.
2. Fiat is not necessarily selling off their shares if Chrysler goes public. (Though they can after their stock is unrestricted)
Otherwise I totally agree with you!
Redline 11:51AM (7/23/2009)
Umm, you sell shares to raise capital?
why not the LS2LS7? 12:07PM (7/23/2009)
1. The company I went public with was before the tech boom. It was in 1994. The stock went from $8 to $10 on the first day, not $40 to $100. And even if FIAT were only doing what tech taught them to do, that doesn't make it right for FIAT either. I had written my usual anti-Sand Hill Road (Silicon Valley venture capitalists) at the top of my text, but removed it because I felt like I had said it all before.
2. I guess I edited my text wrongly because I meant to encompass the case where the company doesn't sell off their own shares which you point out. This case is just a numbers game anyway, even if they don't sell their own shares, by issuing new ones and sell them, they dilute their own shares and still off their ownership in the company.
Redline:
It'd be great if the idea were to raise capital. Change the whole paragraphs Marchionne said to be about "raising capital" instead of "going public". So now he's bragging the company will be raising capital in 2 years? Is this a good thing? If the company will continue to go up in value, wouldn't issuing bonds be smarter, since the current owners would retain all the profits? How about just making money hand over fist to generate your own capital? Shouldn't a CEO aspire to that? Instead he is bragging about how he's going to sell off the company in 2-3 years.
Who 'Dis? Who 'Dat? 11:25AM (7/23/2009)
Cautious optimism. I like it.
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Greg 11:29AM (7/23/2009)
It seems to me that there is more sharing of technology after 6 weeks, than during the entire period of Daimler ownership. I am hopeful.
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Steve Lopez 12:48PM (7/23/2009)
It's a wait and see sort of thing.
I really think this merger can work this time around.
Good luck.
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LX builder 12:09PM (7/23/2009)
Mr. Marchionne did not say anything about Fiat lowering its share in Chrysler. If and when there is a "public offering" I think the UAW VEBA fund would be the current owner looking to lower its ownership stake.
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tuxchown 3:34PM (7/23/2009)
I agree.
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tuxchown 3:35PM (7/23/2009)
Oops. That was in reply to Who 'Dis? Who 'Dat?.