With Dead Weight Lifted, Daimler is Ready to Race

If it wasn't already obvious why Daimler has been trying to shed Chrysler like a bad habit, now that the carmaker has announced first quarter results, things are crystal clear. Below today's headlines about Daimler more than doubling its profit for the first quarter, you might notice a frightening line item - Chrysler suffered titanic losses for the quarter that were worse than anyone expected.

This quarter Chrysler bled 1.49 billion euros, after posting a profit of 641 million euros just a year earlier. Analysts knew things had gone south for the company's U.S. unit but expected it to lose 856 million euros during the quarter. Restructuring charges have already added losses of 914 million euros this quarter, but even after those costs, Daimler said Chrysler is on track to lose more than 2 billion euros ($2.7 billion) this year.

Unloading 80 percent of its stake in Chrysler to Cerberus will go a long way towards sewing up the hole in Daimler's pocket. Another key term of the German carmaker's deal with private equity group Cerberus is that the sale is that it rids Daimler of more than $17.5 billion in unfunded staff healthcare obligations to Chrysler.

The Chrysler sale marks a big improvement in Daimler's liquidity, and although no specifics have been given so far, the company has announced it intends to return some of the cash freed up by the deal to its shareholders.

And not a moment too soon.

by Liz Gunnison

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