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Thursday, March 20, 2008

FedEX Warns

by Calculated Risk on 3/20/2008 08:28:00 AM

From the WSJ: FedEx Sees 'Limited' Growth Ahead

[T]the shipper projected fourth-quarter earnings below analysts' estimates, sees "limited earnings growth" in the upcoming fiscal year and will cut planned capital spending in the current year by another $100 million.

"Our fourth-quarter earnings outlook has been impacted by higher-than-anticipated fuel prices and a weak U.S. economy," said Chief Financial Officer Alan B. Graf Jr. "Looking ahead to our fiscal 2009, we are expecting a continuation of fourth-quarter trends, which would result in limited earnings growth next year. We are scrutinizing all expenses and investments to realign them with the current environment."
UPS warned last week. UPS and FedEx are usually pretty decent coincident indicators of economic activity, and these warnings indicate the economy is probably in recession.

Also important is the planned cuts in capital spending. A number of companies have now announced less business investment in 2008, also impacting the economy.