Proton Speedily Down-hill

In the beginning, they blame the APs (Approved Permit to import cars)

The oligarchy concorted the theme and undressed the minister-in-charge of the handouts, blaming her for the saga.

Then, as financial results will have to be published, the system quickly turn around and hit the CEO with a club - they sack him.

Mahaleel was the victim of circumstances ...

Thereafter, they took to the investors floor to announce the group pre-tax loss of RM4.3mil for the first quarter ended June 30, 2005, compared with a profit of RM198.3mil in the previous corresponding quarter. The losses was attributed to provisions of doubtful debts as well as reduction in sales volume. The loss was on top of the unrealised foreign exchange-gain of RM22.5 mil arising from the revaluation of a 70million euro loan. The preceding quarter recorded a pre-tax profit of RM165.5 mil.

However, the group loss seems miniature and shouldn't have mattered at all.

No, it was a preceding news of more later bad news to be announced ... coming soon ...

Now, before the dateline, they made another pre-emptive notice of prediction to prepare the hearts and minds of investors ... for more bad news to come ... so that the day of reckoning will be less heart-trobing ...

Words are sent out to the investors and the public - that PROTON Holdings Bhd may post a staggering pre-tax loss of some RM700 million for the second quarter, caused mainly by red ink at its overseas subsidiary MV Agusta, the Italian motorcycle manufacturer.

"It looks like the red ink from MV Agusta has spread to Proton’s own books. Undertaking MV Agusta’s outstanding debts with banks and suppliers turned out to be a very expensive venture, and now Proton is paying a high price for its foray overseas,” a source said.

It is understood that these losses are based on debts Proton assumed after taking over MV Agusta, plus the motorcycle maker’s own accumulated operating losses. If the losses are of this magnitude, it will likely push the Proton board, headed by Datuk Mohammed Azlan Hashim, to make some hard decisions on whether to cut its losses and sell off the ill-fated MV Agusta,” the source said.

Proton is due to report its second-quarter numbers for the period to September 30 this week. Analysts were surprised by the magnitude of the first-quarter loss. But they pointed out that management had warned of additional provisions.

By making huge provisions, Proton could be cleaning up its books for its new partner,” an analyst said.

Under former chief executive Tengku Mahaleel Tengku Ariff, Proton rescued MV Agusta, a famed but struggling designer and manufacturer of Agusta, Cagiva and Husqvarna motorcycles. It is believed that the deal to buy a controlling 58 per cent stake in MV Agusta Motor SpA last October set Proton back by Euro70 million, or some RM350 million, by underwriting the company’s loan from Citibank. The new financing saved MV Agusta, allowing a court in Italy to drop temporary receivership proceedings against the Italian motorcycle maker.

Will the situation improve in the 4th Quarter?

Even optimist forecasters and predictors dare not risk their integrity.

Will Proton be able to ride out the storm?

Only God knows ... but men can also know ... all you need is to understand the basic theory of a dysfunction system and trace the structure of the organizational framework and cultures.

Another bailing out is needed not too far from today. More taxes will be needed to patch the holes which is deep ... so deep ... so damn deep ...