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Today's WSJ on Cayenne and Porsche stcok

THE BOTTOM LINE: Porsche Cayenne Not Sleek But Will Sell

By CHRISTIAAN HETZNER

Of DOW JONES NEWSWIRES
FRANKFURT -- Conjure up images of a Porsche and one envisions sleek aerodynamics and sporty curves that instantly whet the appetite for a tear down the German autobahn at breakneck speeds. But have you seen Porsche AG's (G.POR) new Cayenne yet? Many did Tuesday - and the automaker's stock quickly dipped.

The Cayenne, the newest entry in the sports utility vehicle market, will be built by a venture between Porsche and Volkswagen AG (VW), and it looks every bit the product of its two very different parents. While most industry experts and analysts admit that the look of the Cayenne takes some getting used to, they also say it's a shrewd move by Porsche that will rev up good sales.

Its 4.5 liter, eight-cylinder engine makes it the only SUV on the market to accelerate from 0 to 100 kilometers per hour in 5.6 seconds and reach top speeds of 266 kph. But inevitably it is the un-Porsche-like design that raises eyebrows particularly when a Porsche-like price tag of roughly EUR75,000-EUR110,000 is attached to it.

A picture of the Cayenne graced the cover of Porsche's shareholder newsletter, which promptly sent shares 4.9% lower to EUR510.50 on Tuesday. Shares have since recovered. Early Friday they were EUR537.50. "The shareholder newsletter with its photo of the Cayenne was the catalyst for profit-taking in the stock," Stefan Reck, an institutional sales trader at DZ Bank said that afternoon. "At first sight, it wasn't exactly electrifying."
A Duesseldorf-based trader and self-described Porsche enthusiast was far more blunt. "Porsche is not doing itself a favor by selling such a dreadful thing, and certainly not at that price," he said. The German automaker has taken a bold step from its tradition lineup of flashy sportscars - a move market watchers are closely eying.

"There is so much ambition built into the stock, and all of it is based on the Cayenne," says an analyst at Commerzbank, which has a reduce rating on the stock. "It would have to be the most successful SUV in the world to justify the current valuations," he says, referring to a price earnings multiple of 30 that dwarfs an auto industry average of eight or nine.

Othmar Wickenheiser, director of the International Design Center in Berlin, agrees that there is little room for mistake. "Porsche has achieved cult status with its 911 (model), and designers are only allowed to very minimally alter its appearance," Wickenheiser says. As soon Porsche started to move from this model, they have played with fire, he said. "None of its other sports cars like the 924, 928, 944 or 968 ever became a real success," he said, adding that "even the Boxster is merely an extension of the 911 design."

He admits that designing the SUV must have been a challenge. Regardless of whether the company focused the design on utility or lifestyle, the Cayenne was bound to confront problems because of Porsche's strong association with pure sports cars.

"It won't be an instant success - the Cayenne definitely requires some getting used to," Wickenheiser says.

Deutsche Bank analyst Lars Ziehn added, "There was so much hype surrounding this model that it was impossible for Porsche to fulfill everyone's fantasies. There's bound to be some disappointment." "The same thing happened with the Boxster and that became an absolute smash," said Ziehn, who rates Porsche a buy.

Expected To Sell Well

James Kelly, Professor of Auto Design at the Pforzheim Technical College, is confident that the Cayenne will be a success due to Porsche's "bullet-proof image." But, while it includes some snazzy features like elegant headlights, graceful hood and snazzy brake cooling inlets, he said "it looks as if the designers had their hands tied."

This is primarily the result of Porsche's decision to circumvent enormous development costs by manufacturing the body in a Volkswagen factory, while installing the engineering, interior and hood at its Leipzig factory. The result looks to be a picture of a conventional SUV superimposed onto that of a Porsche chassis.

Industry expert Peter Schmidt of U.K.-based Automotive Industry Data said Porsche hit the nail right on the head, sharing the risk and cost of launching a new product with VW while targeting a niche in the SUV segment of the North American market. This market has been characterized in recent years by high margins and rapid growth rates, previously dominated entirely by Detroit's Big Three. "This is targeted at status conscious Americans who want the image of a Porsche and the power of a four-by-four, but would never even dream of actually going off-road with it," Schmidt said. "Give the customers what they want, it's classic marketing and really extremely clever of Porsche."

In fact, Schmidt's only criticism is the company's failure to come up with the idea sooner. Dresdner Kleinwort Wasserstein auto analyst Thomas Aney said performance is more important than design for the success of the model. "A lot more is riding on what's inside the Cayenne," he said. The company itself is a good investment, Aney said. "No other carmaker comes even close to generating the 40% revenue growth we expect over the next two years," he said, basing estimates on expected high demand for the Cayenne. Aney has a buy rating on Porsche. The company is also confident and says the Cayenne has "no predecessor."

Porsche believes it includes enough to convince the market that the Cayenne is from the same manufacturer as the Boxster and 911. "With its deeply drawn hood and striking headlights, the Cayenne is immediately and unmistakably recognizable as a Porsche in its design," the company said.
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Old 03-08-2002, 07:22 AM
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Interesting article. Anyone know offhand tody's Euro exchange rate?

Chuck
Old 03-08-2002, 07:57 AM
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European dollar rate...

1 US$ equals 1.141944 euros.

So you take 75000 euro and divide it by 1.141944 you find a cheap SUV for US$ 65,677.48 which is a steal, no?

Maybe the Euro will go down yet??? (I sure as blazer hope not!)

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Old 03-08-2002, 08:22 AM
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Does anyone know the current value per share of Porsche stock?

I think it is one of the most expensive auto stocks on the Frankfurt Exchange or anywhere for that matter.

The next nearest automaker's stock does not even come close!

John
Old 03-08-2002, 08:38 AM
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Re: European dollar rate...

Quote:
Originally posted by Paul Franssen
1 US$ equals 1.141944 euros.

So you take 75000 euro and divide it by 1.141944 you find a cheap SUV for US$ 65,677.48 which is a steal, no?

Maybe the Euro will go down yet??? (I sure as blazer hope not!)

Which means the Euro is worth about 88 cents. I was floated at just above a dollar when first introduced and has fallen fairly steadily since then.
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Old 03-08-2002, 08:56 AM
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Todays price on Porsche stock is 540.50 euro or $473.21 US
Old 03-08-2002, 10:28 AM
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Re: Today's WSJ on Cayenne and Porsche stcok

Quote:
Originally posted by Decolliber
"This is targeted at status conscious Americans who want the image of a Porsche and the power of a four-by-four, but would never even dream of actually going off-road with it,"
Isn't that a way of saying it is the ultimate poser-mobile? But look around, there are lots of posers.
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Old 03-08-2002, 10:37 AM
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The European economies are lagging the US by 6-12 mos IMO. The euro should strengthen against the dollar as they emerge from recession over the next year I believe.
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Old 03-08-2002, 11:02 AM
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Yeah bro, ya' gimme the crystal ball and I'll be rich!

Some European politicians promise us an increase in the relative value of the Euro, but who's to tell? We've hear promises before...

I myself have never been able to make heads or tails of stock market values et. al. Less than a year ago I considered giving my Porsche-loving kid one Porsche share, but I didn't: too expensive, and with an economy slowing down, how could Porsche shares go up. Well they did, and by a helluvelot!!!

So... BUY BUY THE CAYENNE!!!

(I'll see if I can get my Carrera in top shape!!!)

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Old 03-08-2002, 11:18 AM
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BUY LOW, SELL HIGH!

There is talk in the financial world about Porsche listing it's shares for sale with the New York Stock Exchange as Mercedes Benz did several years ago.

Question: Would you buy the stock or just drive the products??

WHY???

Please advise.

JOHN
Old 03-08-2002, 11:19 AM
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Re: BUY LOW, SELL HIGH!

Quote:
Originally posted by jfitzoz
There is talk in the financial world about Porsche listing it's shares for sale with the New York Stock Exchange as Mercedes Benz did several years ago.
Question: Would you buy the stock or just drive the products??
Both, of course. Porsche stock split 10:1 earlier this years and was at about $350 in May. Then after 9/11/01 it dropped below $200, before climbing to its current price around $500 per share. Porsche shares are not likely to be listed on the NYSE, because to do so it would have to comply with US rules about release of quarterly finacial information.
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Old 03-08-2002, 12:51 PM
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Is Porsche hoping for new customers to buy the Cayenne? I tend to think the Cayenne will do nothing more than steal sales from the 996 and Boxster. Every poser attorney and doctor will want the latest from Porsche. They could care less about the company's heritage, 911's or racing - they're only concerned with the emblem on the back of the vehicle!

Wouldn't everyone agree that most new 996's are purchased by posers? And if these posers all buy the Cayenne, what happens to 996 sales? I guess this is the 'shoot-thy-self-in-thy-foot' theory. -- Curt
Old 03-08-2002, 03:50 PM
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For Paul Belgik

Here is a good link to watch the Euro/Dollar trends.

Cheers.

http://www.forexdirectory.net/chartsfx.html
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186,000 MPS.....not just a good idea....its the Law!

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Old 03-08-2002, 06:19 PM
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Re: Today's WSJ on Cayenne and Porsche stcok

Quote:
Originally posted by Decolliber
"even the Boxster is merely an extension of the 911 design."
right......

People say this way too much considering how the 986 is more an extension of 914 design in my opinion.
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Old 03-08-2002, 07:30 PM
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How bout that crystal ball??
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186,000 MPS.....not just a good idea....its the Law!

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Old 07-08-2002, 10:50 PM
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So how exactly is the Boxster an "extension of the 911 design"? Thank god they got a quote from a "design expert".
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Nostatic,

I guess it depends on 'WHAT' ... you define as a 911 ...

Did the 996 begat the Boxster ... or vice versa???

Kind of a 'Which came first ... the clam or the oyster?' sort of question ... or was it the 'eliptical' Taurus that inspired them both?

Or, was it the works of Georgia O'Keefe that inspired all of the above?
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Old 07-09-2002, 12:18 AM
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Is Porsche getting the jitters about the Cayenne? Noticed an advertisement in AutoWeek. It simply says:

Questions Answered.
Fears Calmed.
Adrenline Rushed.

porschecayenne.com


Could probably use the same basic ad for the Dow-Jones these days .... -- Curt
Old 07-14-2002, 05:33 AM
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I think it will be a smashing success, Luvey!
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Old 07-14-2002, 05:54 AM
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Re: Posers

If the posers buy the PepperVagen instead of our precious sportcars, then I say it is a good thing. It will be easier to spot them and they will look less like us !! For years we've been trying to figure out how to tag the posers. Now they will tag themselves !! The only downside is we'll be eating their dust.



Re: Porsche Stock

Can I get Porsche stock through an online trader like Ameritrade? And do they offer physical stock certificates? I think a framed share of Porsche stock would make a very fine addition to my workshop wall. And it would appreciate as well !! Win - Win.

Thanks,
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Old 07-14-2002, 07:07 AM
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