DaimlerChrysler reported fourth quarter results that soundly beat analyst's forecasts, led by an unexpected profit from the Mercedes division. The company posted an operating profit of $1.25 billion in Q4.

Sales growth at Mercedes, fueled by new model introductions, helped offset restructuring charges, resulting in a narrow profit instead of the expected loss.

Chrysler provided the dark cloud for Mercedes' silver lining, with operating profit falling 50 percent in the fourth quarter. Reuters quotes analysts as expecting continued weakness from Chrysler through 2006. Currently Chrysler is suffering from a painful inventory glut, and some of the highest sales incentives in the industry. DaimlerChrysler chief executive Dieter Zetsche, the man in the driver's seat, predicted a tough market for Chrysler going forward, while saying both Mercedes and Smart are on track to hit his targets.

Markets seemed to weight DaimlerChrysler's weaknesses more heavily than its Q4 profit Thursday, and share prices fell after the earnings announcement.

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