Chrysler's record profit disappoints

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NEW YORK - Chrysler reported a record pre-tax profit of dollars 880m for the first three months of the year but failed to meet the more optimistic expectations of Wall Street, writes Larry Black.

The results for the third-ranked US car maker were distorted by a huge one-off accounting charge of dollars 4.7bn, which covers the firm's future liability for the cost of healthcare benefits for retired employees. The charge wiped out Chrysler's dollars 530m operating profit - which compares with a loss of dollars 231m in the comparable period a year ago - leaving it with a quarterly loss of dollars 4.1bn, or dollars 12.81 a share.

Operating profit, equal to about dollars 1.57 a share, was below Wall Street's prediction of dollars 1.80, prompting a sell- off of Chrysler shares.

In contrast, first-quarter results for Chase Manhattan managed to please banking analysts. The bank posted a loss of dollars 347m as a result of a decision to segregate for sale dollars 2bn worth of troubled property loans, taking a charge of dollars 884m. But it used dollars 500m worth of deferred tax credits to cushion the impact of the special reserve, resulting in a dollars 157m profit.