AT LEAST FOR a while it will be hard for auto companies to get much respect from investors.
When technology shares plunged in April it promised a windfall for old-economy automotive stocks. But it hasn't turned out that way. Quite the opposite.
Investors worldwide - at least the new breed that jumped on the tech bandwagon in the past couple of years - don't believe in anything that doesn't promise a miracle.
Old-fashioned value is meaningless to them. Throughout most of their short investment lives even the most powerful companies in the auto industry have been 'undervalued' by the stock market. Thus their real value - in textbook or Warren Buffet terms - is irrelevant to their investors..
DaimlerChrysler is trying to find a way to revive its battered share price, which is down 25 percent in the past year. At the company's financial press conference last month, Chairman Jurgen Schrempp surprised reporters by discussing D/C's future product strategy. He was searching for anything to make financial analysts sit up and take notice.
Schrempp also chose the occasion to introduce a new cost-cutting scheme to boost profit margins.
We already knew most of the product details he revealed - or else we might have predicted them. Furthermore, every company must cut costs to improve the bottom line.
Companies have to dazzle the investment community with their stories these days - so accustomed are investors to exponential growth scenarios from silicon start-ups. Unfortunately, that can't be done by revealing a new roadster, or a plan to cut the headcount at headquarters, or even by announcing a new strategic acquisition.
And carmakers should not promise miracles they cannot deliver.
Still, the openness displayed at DaimlerChrysler's financial press conference was refreshing. It was the kind of frankness that ultimately will pay off with investors.