"Altruistica": Seeking a return to full financial disclosure and regulatory oversight. A financial market analysis blog for "entertainment purposes" only by an experienced CFA seeking new hedge fund engagements for investment writing and analysis. The author has experience investing internationally, running a hedge fund, making angel investments, and helping launch five startup companies. Investors should do their own due diligence.

21 December 2006

FedEx Points Out U.S. Recession Has Started

From AP: FedEx 3Q Outlook Overshadows 2Q Earnings

FedEx Corp.'s second-quarter profit gain of 9 percent was overshadowed Wednesday by the outlook for the third quarter. After reporting a strong second quarter that "exceeded analyst expectations", the company said it expected lower third-quarter earnings than last year, largely due to a sluggish U.S. economy and fuel bills.
"We believe FedEx is beginning to see the impact of a slowing economy and as such, management is tempering expectations for the second half of the year," analyst Art Hatfield said in a report for Morgan Keegan.

But international markets are doing well:

"They said themselves that the domestic economy is showing signs of weakness," Broughton said. "FedEx's international business continues to grow and in a down-volume domestic environment, they produced the best operating margins they've ever produced."
In a conference call with analysts, FedEx founder and chief executive Frederick W. Smith said FedEx expects "steady performance" for the fiscal year ending May 31 largely because of a "healthy global economy led by continued strong growth in Asia."

But Smith also acknowledged he expects a "somewhat slower growth in the U.S. economy related to adjustments in housing and manufacturing sectors."

JP Morgan Gets It: FedEx Corp-FDX upside Q2 but Q3 guidance lowered, stock lacks catalyst-Neut@JPMS
The firm is cautious on FedEx because they believe the company will not be immune to the potential weakening demand in the transport industry. They consider FedEx's Q2 report to be positive for UPS based on solid domestic parcel demand.

But, lookie here, NO INFLATION
(This can't be good for Amazon on online shippers...rallying??BS)

FedEx-FDX to boost rates January 1st-Bloomberg
FDX said it would increase U.S. ground shipping rates an average 4.9% next year, its largest increase since 1998. Last month the company said that it would increase rates for FedEx Express air shipments by 3.5%.


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