Weak Global Economy Reflected in FedEx Earnings
News on Wall Street on Wednesday included the earnings forecast cut by FedEx, causing the company’s stock to fall $2.54 to $85 – a drop of 2.9 percent. As the world’s second-largest package courier company, FedEx has long been relied on for its overnight international shipments, but the company has cited the weak global economy as negatively impacting its profits, noting that customers around the world appear to be making use of slower, but less expensive, delivery options. As FedEx’s first fiscal quarter ends on August 31, the company anticipates earning between $1.37 and $1.43 per share as opposed to previous forecasts of $1.45 to $1.60 per share.
Founded as Federal Express Corporation in Little Rock Arkansas in 1971, FedEx has grown into the publicly-traded FedEx Corporation with subsidiaries FedEx Office, FedEx Express, FedEx Ground, FedEx Freight, FedEx Custom Critical, FedEx Trade and FedEx Supply Chain. In May 2011 it was reported that the company employs around 290,000 people worldwide, operating in North America, South America, Europe, Middle East, Africa, Asia and Indian Subcontinent, and Oceania and Pacific. FedEx operates one of the world’s largest civil aircraft fleets and has the largest fleet of wide-bodied civil aircraft, offering overnight courier services between numerous international destinations. FedEx Ground operates an extensive fleet of owner/operator trucks and drivers who work as independent contractors within specified territories.
Other news on Wall Street included the likelihood of the US Federal Reserve providing new stimulus to the economy. The government’s monthly report on employment due out tomorrow (Friday) will shed more light on the economy for investors, as the job situation is an important indicator of economic recovery. The Labor Department on Wednesday revealed that productivity increased by 2.2 percent in the second quarter of 2012, being up on the initial estimate of 1.6 percent. An announcement by Facebook’s CEO Mark Zuckerberg that he would not sell any shares for a year resulted in Facebook stocks gaining 85 cents to $18.58.
Wednesday saw the Dow Jones industrial average close at 13,047.48 – up 11.54 points, or 0.09 percent. The Nasdaq composite index dropped 5.79 point, or 0.19 percent, closing at 3,067.27, while the Standard & Poor’s 500 fell 1.50 points, or 0.11 percent, closing at 1,403.44.