Update: DaimlerChrysler Misses Estimates - TheStreet

Updated from 8:13 a.m. EDT

DaimlerChrysler

(DCX)

reported quarterly earnings below market expectations on Thursday, as strong sales in luxury vehicles could not make up for weakness in the U.S. automobile market.

The German-American auto giant said operating profits, excluding one-off items, reached 540 million euros ($448.9 million), down from 2.6 billion euros a year ago. According to analysts polled by

Reuters

, the market expected the company to earn 635 million euros.

Revenue on a comparable basis increased 8% over the third quarter of last year to 37.2 billion euros. The company reported earnings per share of 0.33 euros, compared with 1.51 euros a year ago.

The company's financial results would have been worse had the company not taken a 500 million euro charge associated with its vehicle lease plans, said David Healy, who covers the company for

Burnham Securities

.

"That was a surprise," he said, noting that both

General Motors

and

Ford

accounted for the item as part of its operating profits.

Healy has an avoid rating on the stock, and his firm has not done underwriting. "As an investor I'd prefer to watch Chrysler solve its problems from the sidelines," said Healy, who predicted shares in the company will likely stay put for the next year in the $40-range.

In September, the company, based in Stuttgart, Germany, and Auburn Hills, Mich.,

warned investors that its Chrysler unit would lose 600 million euros for the quarter -- a figure that proved true in Thursday's earnings release. The company attributed the loss to high U.S. incentives and the costs of launching new versions of its minivan and mid-size sedans.

"The intense competition for market share in North America continues to have a significant impact on the Chrysler Group's results," said Jurgen Schrempp, chairman of DaimlerChrysler's board of management, in a statement.

The company said it expects Chrysler to return to profitability in the fourth quarter, and expects full-year operating profit of 2 billion euros, compared with 5.1 billion euros in 1999.

The strongest growth in both revenues and profits came from the company's Mercedes-Benz luxury car unit, which posted a 15% rise in revenues to 10.5 billion euros and a 5% jump in operating profits, to 743 million euros.

Overall, the company expects to report operating profit of 7 billion euros for the year, compared with 10 billion euros in 1999.

DaimlerChrysler finished up 30 cents at $43.73, well off their yearly high of $78.69.