To: AlienTech who wrote (36263 ) 1/9/2001 9:40:34 AM From: Crystal ball Respond to CEO Dieter Zetsche makes DaimlerChrysler run right. CNBC interview this morning proves that Zetsche is one of the few corporate executives that is responding in a classically corect manner to the changed economic circumstances. Guest Analyst Kraemer (of Wallstreet.com) questioned Zetsche's plans to intentionally produce less vehicles in order to lower the glut of inventory currently plaguing the auto industry as a result of the recessionary market collapse. Zetsche perfectly well understands that the only way to obtain price stability is to CUT SUPPLY instead of ramping up in a high interst rate environment, to try and INCREASE SUPPLY WHEN DEMAND IS LOW. This is the proper response, unlike the many dot coms that borrowed to ramp up supply beyond demand in the mere hopes of capturing market share amidst a glut of inventory, in a world that is also simultaneously producing additional inventory in slave labor markets like communist china's 12 cent an hour WTO/CHINA TRADE AGREEMENT, all leading to the results we have recently sen at Apple Computer (AAPL) PRICE CUTS to clear up inventory supply. Or Priceline.com name your price "give-aways", and others whose supply side business model ignored price, by just giving away goods and services for free, as a LOSS LEADER to garner ad revenue. No one stays in business for long selling below profit margin prices due to over supply in a lower demand economy. We are going back to a demand economy, not supply side. Executives that remember the basic PRICE/SUPPLY/DEMAND CURVE will survive, those that have not, and have over extended themselves with borrowing amidst higher Federal Interest Rates that must be substantially lowered at least 50 more basis points at the end of this month, and perhaps again interim during February's clean slate when there usually is no FOMC meeting, these companies will cease to exist. It is hoped that other auto companies follow the wisdom of Dieter Zetsche, and cut inventory by curring future supply to achieve price stability, so that their industry survives this crisis intact with a quantified fixed market share, instead of an variable unfixed market percentage share.
