Survey of Recent Stock Performance

Survey of Recent Stock Performance. Immediately after the merger, the stock price of the new company went up very drastically. The reason for this is that investors strongly believe in the future success of DaimlerChrysler. Currently, the stock price is down. This fact can be explained by the general performance of the market, which is experiencing very sudden slumps. Many huge companies do not trade at all out of fear of prices drop. Below is the chart of stock price performance of the DaimlerChrysler since the merger.

Below is a valuation of DaimlerChrysler by analysts at Standard Poor s. DCX has fallen sharply from its early 1999 peak. The automotive sector has been out of investor favor for some time, with DaimlerChrysler contributing to the negative sentiment with its much lower than expected earnings in the second quarter. Despite DCX s attempt to portray the divergence from expectations as mostly accounting and temporary items, the honeymoon for investors and DaimlerChrysler is clearly over. DaimlerChrysler has a strong balance sheet, with significant cash reserves available for the next industry downturn, as well as for strategic investments and alliances. With strong sales through September, we expect 1999 domestic automotive volume, led by minivans and sport utility vehicles, DCX strengths, to reach a record.

Still, given negative investor sentiment and uncertainty in the company s ability to meet financial objectives, despite a strong third quarter, we would not add to positions.

Standard Poors, Stock Report, March 4, 2000 Comments on some of the Financial Ratios of the New Corporation As the ratios reveals new corporation by some of the ratios overcome industry average. Valuation ratios show us DaimlerChrysler is in better standing in comparison with the industry. Dividends payout ratio proves that the company pays more dividends than average, but I think it is not what investors expected and this lead to a drop in price of the stock. Financial strength of the company in terms of LT Debt to Equity and Total Debt to Equity ratios is almost twice stronger than the average in the industry.

Low return on Equity ratio might be explained by the fact that the company keeps a lot of cash for the purpose of new investment. In general, the company shows strong figures and this view is supported by Standards Poor s specialists statement. DaimlerChrysler has a strong balance sheet, with significant cash reserves available for the next industry downturn, as well as for strategic investments and alliances.

Standard Poors, Stock Report, March 4, 2000