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Are you guys buying FIATY on OTC or F.MI.  :), any difference?. Thanks

 

Could someone please shed some light on this? Thanks so much!

I am buying the ADR...not sure if there is much of a difference!

 

I assume it's down today as investors get squemish regarding the trial delay and the uncertainty regarding the Chrysler IPO

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There was a piece in the WSJ today on Chrysler. The main negatives were they had more debt than cash and their autos aren't as efficient as others with respect to mpg. They need to spend to get their vehicles up to par.

 

I read an article earlier this month that quoted Bernstein Research saying they could get their margins up to 7 to 8% in 2015. Today's story said their margins were 4.5% in Q2. I had been trying to pin down their operating margins so I was glad to see a figure quoted.

 

Chrysler did $65B in sales last year. If they can squeeze another 2.5% out that's $1.6B in extra ebitda annually. 65% or $1B accrues to Fiat. A six times ebitda multiple adds $6B to Fiat shares. Roughly a 60% increase to their present market cap.

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There was a piece in the WSJ today on Chrysler. The main negatives were they had more debt than cash and their autos aren't as efficient as others with respect to mpg. They need to spend to get their vehicles up to par.

 

I read an article earlier this month that quoted Bernstein Research saying they could get their margins up to 7 to 8% in 2015. Today's story said their margins were 4.5% in Q2. I had been trying to pin down their operating margins so I was glad to see a figure quoted.

 

Chrysler did $65B in sales last year. If they can squeeze another 2.5% out that's $1.6B in extra ebitda annually. 65% or $1B accrues to Fiat. A six times ebitda multiple adds $6B to Fiat shares. Roughly a 60% increase to their present market cap.

 

They file so you can check the source.

 

Here's the 10-Q: http://www.sec.gov/Archives/edgar/data/1513153/000119312513332881/d554670d10q.htm

 

 

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It is difficult to say what was priced in and what was not.

They reported worse results in North America and Brazil than a year ago (some of it caused by the weaker currencies compared to the Euro) and better results in Europe, Asia, Argentina and luxury brands. Maserati had a good quarter with revenues more than double Q3 2012. Net industrial debt was 8.3 billion, compared to 6.7 billion last quarter.

 

 

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I have to say, that was a brilliant response by Marchionne about the relative factors affecting the European car business.  I recommend anyone listen to the last 17 minutes of the conference call (starting @ 1hr 4min) : http://www.media-server.com/m/p/5y8x3523

 

Just to summarize, the problem is essentially a game of chicken. Who will be the first to cut production in Europe? Marchionne hits it on the head: the first person to do it, loses! Everyone left can absorb the incremental capacity and run their plants at a higher utilization.

 

Therefore nobody does it. So Marchionne calls for a Euro-wide process under which all car makers do it equally, but that won't happen due to all the bloody politics that go on with an issue like that. So in the meantime, he pursues a strategy of using that excess capacity to other ends. To other regions, and to move up the ladder into luxury car production. It's the best move possible.

 

Really a brilliant guy, I encourage again to listen to the CC.

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