Kirk Kerkorian: Could He Make A Play For Chrysler?

By Phil LeBeau
cnbc.com
| 08 Feb 2008 | 03:58 PM ET

By now, you’ve probably have seen the headlines or stories about Kirk
Kerkorian’s advisor Jerry York giving a pessimistic view of Chrysler’s
future.

After speaking here in Chicago, York was asked about the prospects for
the struggling automaker to turn things around. York said, "Chrysler
as a stand-alone company is not viable."

He went on to add that he suspects Chrysler parent Cerberus Capital
Management is considering every option "because of the pressure the
company is under." As soon as I read those comments I could hear the
rumor mill starting up. The main question people reading York’s
comments will ask is whether the man York advises, Kirk Kerkorian,
would ever make a play for Chrysler. My gut says Kerkorian would only
do it if he could "get" Chrysler on the cheap. And given the money and
time Cerberus has sunk into Chrysler, I doubt the private equity firm
is ready to throw in the towel on Chrysler at a low price.

Sure Chrysler is a money losing operation right now, and yes,
Cerberus, like all private equity firms, is in the business of seeing
a a return on its investments as quickly as possible. That doesn’t
mean it’s looking to pullthe chord on Chrysler as soon as
possible. And selling at the bottom of a market is not a smart
move. The time to sell is in a year or two when the auto market is
moving ahead, and Chrysler is conceivably in better financial shape.

Chrysler CEO Bob Nardelli and President Jim Press have to move as
quickly as possible to stem the losses. Which is why the company is
considering a plan to streamline its product portfolio and dealer
network _(see early Behind the Wheel blog)._
( 1545/) Chrysler still has a
lot to build on. It’s number 4 in the U.S., costs will be coming down
with the new UAW contract, and the Jeep brand is one of the few in the
auto industry with instant worldwide recognition.

The speculation about why York is not optimistic about Chrysler’s
future is just that: speculation. Knowing Jerry as I do, I take his
comments as those coming from an industry veteran and not as someone
laying the ground work for another Kerkorian auto bid.

Questions? Comments? _BehindTheWheel@cnbc.com_
(mailto:BehindTheWheel@c nbc.com)
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