FedEx a Barometer for the Economy Posts 0.31 cent vs. Analyst Expectations of 0.46 cents… Outlook Looks Very Grim

Pay close attention to the conference call !

MEMPHIS, Tenn.–(BUSINESS WIRE)–FedEx Corp. (NYSE: FDX – News) today reported earnings of $0.31 per diluted share for the third quarter ended February 28, compared to $1.26 per diluted share a year ago.

“Our financial performance was sharply lower during the quarter due to the global recession,” said Frederick W. Smith, FedEx Corp. chairman, president and chief executive officer. “While we are gaining market share in all of our transportation segments, the downturn in our industry and the severity and expected duration of the recession require that we take additional actions.”

Cost-Reduction Actions

In light of the continuing deterioration in the global economy, FedEx will implement additional cost-reduction initiatives, both in the U.S. and internationally. These measures include the following:

* Network capacity reductions at FedEx Express and FedEx Freight
* Further reduction of personnel and work hours
* Expansion of previously announced pay actions to include non-U.S. employees, where permitted
* Streamlining of information technology systems and other internal processes
* Additional reductions in other spending categories
* Increased economies in the acquisition of goods and services

These cost-reduction actions are expected to result in fourth quarter charges of approximately $100 million, excluding any potential asset impairment charges. For fiscal 2010, these actions are targeted to reduce expenses by approximately $1.0 billion.

“Our goal when we implemented compensation reductions in January for U.S. salaried personnel was to both protect our business and minimize the loss of jobs,” said Smith. “With industrial production and global trade trends worsening since last quarter, we are applying these additional measures to continue to secure as many of our jobs as possible during this downturn. We remain focused on providing outstanding service, and will ensure that our actions do not impede our industry-leading customer experience.”

Outlook

FedEx expects earnings to be $0.45 to $0.70 per diluted share in the fourth quarter, excluding any one-time charges. Earnings in last year’s fourth quarter were $1.45 per diluted share, excluding a charge of $891 million ($696 million, net of tax, or $2.22 per diluted share) related predominately to non-cash asset impairment charges associated with the decision to minimize the use of the Kinko’s trade name and a reduction in the value of the goodwill resulting from the Kinko’s acquisition. This outlook assumes continued weak global macroeconomic conditions and stable fuel prices.

Third Quarter Results

FedEx Corp. reported the following consolidated results for the third quarter:

* Revenue of $8.14 billion, down 14% from $9.44 billion the previous year
* Operating income of $182 million, down 72% from $641 million a year ago
* Operating margin of 2.2%, down from 6.8% the previous year
* Net income of $97 million, down 75% from last year’s $393 million

Operating results decreased significantly in the quarter, as the continued deterioration in global economic conditions led to lower shipment volumes at FedEx Express and FedEx Freight and a more competitive pricing environment. Revenue was also negatively impacted by reduced fuel surcharges and lower shipment weights. Revenue declines were partially offset by stringent cost control efforts and market share gains, including volumes gained from DHL exiting the U.S. domestic package market. Also included in this quarter’s results were costs related to personnel and facility reductions at FedEx Freight and FedEx Office.

FedEx Express Segment

For the third quarter, the FedEx Express segment reported:

* Revenue of $5.05 billion, down 18% from last year’s $6.13 billion
* Operating income of $45 million, down 89% from $425 million a year ago
* Operating margin of 0.9%, down from 6.9% the previous year

U.S. domestic package revenue declined 15%, driven by a 12% drop in revenue per package due to lower fuel surcharges, weight per package and rate per pound. U.S. domestic package volume declined 3%, despite the benefit of DHL exiting the U.S. domestic package market. FedEx International Priority® (IP) package volume fell 13%, with declines in every international region. IP revenue per package dropped 8% due to lower fuel surcharges and unfavorable exchange rates.

Operating income and margin declined due to revenue decreases, despite a 12% decline in expenses driven by lower fuel prices, significant volume-related reductions in flight hours, labor hours and fuel consumption, and aggressive actions to reduce spending.

In February, FedEx Express began operations at its new Asia-Pacific hub located at Baiyun International Airport in Guangzhou, China. The strategically located hub is the company’s largest outside of the United States and positions FedEx to better serve customers doing business in China and the broader Asia-Pacific markets.

FedEx Ground Segment

For the third quarter, the FedEx Ground segment reported:

* Revenue of $1.79 billion, up 4% from last year’s $1.72 billion
* Operating income of $196 million, up 15% from $170 million a year ago
* Operating margin of 10.9%, up from 9.9% the previous year

FedEx Ground average daily package volume grew 2% year over year, primarily due to continued growth in the FedEx Home Delivery service. Yield improved 2% primarily due to increased extra services and higher base rates. FedEx SmartPost revenue increased 14%, while average daily volume grew 44% largely due to market share gains, including gains from DHL’s exit from the U.S. domestic package market.

Operating income and margin increased due to lower fuel prices, higher revenue and improved performance at FedEx SmartPost.

FedEx Freight Segment

For the third quarter, the FedEx Freight segment reported:

* Revenue of $914 million, down 21% from last year’s $1.16 billion
* Operating loss of $59 million, down from operating income of $46 million a year ago
* Operating margin of (6.5%), down from 4.0% the previous year

Less-than-truckload (LTL) average daily shipments decreased 13% year over year, as market share gains were more than offset by the worst LTL environment in decades. LTL yield declined 7%, due to lower fuel surcharges and the continuing effects of a competitive pricing environment resulting from excess capacity in the LTL industry.

The operating loss reflects the extraordinary decline in demand for freight services, the continued competitive pricing environment, costs related to the consolidation of our freight regional offices and severance charges from personnel reductions. These negative factors were partially offset by lower variable incentive compensation and continued stringent cost-containment initiatives, including the personnel and facility reductions.

FedEx Services Segment

FedEx Services segment revenue, which includes the operations of FedEx Office and FedEx Global Supply Chain Services, was down 10% year over year due to declines in printing and document service revenues.

Corporate Overview

FedEx Corp. (NYSE: FDX – News) provides customers and businesses worldwide with a broad portfolio of transportation, e-commerce and business services. With annual revenues of $38 billion, the company offers integrated business applications through operating companies competing collectively and managed collaboratively, under the respected FedEx brand. Consistently ranked among the world’s most admired and trusted employers, FedEx inspires its more than 290,000 team members to remain “absolutely, positively” focused on safety, the highest ethical and professional standards and the needs of their customers and communities. For more information, visit news.fedex.com.

Additional information and operating data are contained in the company’s annual report, Form 10-K, Form 10-Qs and third quarter fiscal 2009 Statistical Book. These materials, as well as a Webcast of the earnings release conference call to be held at 8:30 a.m. EDT on March 19 are available on the company’s Web site at www.fedex.com/us/investorrelations. A replay of the conference call Webcast will be posted on our Web site following the call.

Certain statements in this press release may be considered forward-looking statements, such as statements relating to management’s views with respect to future events and financial performance. Such forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from historical experience or from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, economic conditions in the global markets in which we operate, legal challenges or changes related to FedEx Ground’s owner-operators, new U.S. domestic or international government regulation, the impact from any terrorist activities or international conflicts, our ability to effectively operate, integrate and leverage acquired businesses, changes in fuel prices and currency exchange rates, our ability to match capacity to shifting volume levels and other factors which can be found in FedEx Corp.’s and its subsidiaries’ press releases and filings with the SEC.

Reconciliation of Non-GAAP Financial Measures

To GAAP Financial Measures

The company believes that meaningful analysis of our financial performance requires an understanding of the factors underlying that performance and our judgments about the likelihood that particular factors will repeat. Excluding the estimated impact of charges related to cost-reduction actions from our earnings guidance for the fourth quarter of fiscal 2009 will allow more accurate comparisons to our operating performance during the fourth quarter of fiscal 2008. Likewise, excluding the impact of the FedEx Kinko’s-related charges from fiscal 2008 fourth quarter results will allow more accurate comparisons to our earnings guidance for the fourth quarter of fiscal 2009. The table below presents a reconciliation of our presented non-GAAP measures to the most directly comparable GAAP measures.

fuck all these jokers, this is our money folks

March 19 (Bloomberg) — Citigroup Inc. plans to spend about $10 million on new offices for Chief Executive Officer Vikram Pandit and his lieutenants, after the U.S. government injected $45 billion of cash into the bank.

Affidavits filed with New York’s Department of Buildings show Citigroup expects to pay at least $3.2 million for basic construction such as wall removal, plumbing and fire safety. By the time architect’s fees and expenses such as furniture are added, the tally for the offices at the bank’s Park Avenue headquarters will be at least three times as high, according to a person familiar with the project who declined to be identified because he’s not authorized to comment. Citigroup said the project will help it save money over time.

Pandit, criticized by lawmakers over Citigroup’s use of U.S. bailout capital, canceled an order for a company jet in January and told Congress on Feb. 11 that, “I get the new reality and I’ll make sure Citi gets it as well.” Of the biggest U.S. banks that received federal aid, only Citigroup has turned to the government three times for rescue. The company, once the biggest U.S. bank by assets and market value, has agreed to limit perks and restrict executive pay.

“In this environment, it absolutely sends the wrong message,” said Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware, referring to the office renovations. “Timing in life is everything.”

Citigroup said in a statement that the construction is part of a global space-saving initiative.

Cost Savings

“Senior executives in our corporate headquarters are moving from two floors to smaller, simpler offices on a single floor,” the company’s statement said. “Based on estimates made when the project was initiated, we expect to generate savings in the next few years well in excess of the project costs.”

Citigroup began planning the renovation last June and obtained demolition permits in September, before the bank received any bailout funds, said a person briefed on the process.

Some city approvals for the project weren’t issued until after Citigroup got its first $25 billion from the U.S. in October, under the Troubled Asset Relief Program, or TARP, according to records available at the New York Department of Buildings.

The new executive suite will be located on the second floor of Citigroup’s office on 399 Park Avenue, a floor below the one Pandit, 52, inherited when he took over as CEO from Charles “Chuck” Prince in December 2007. The second floor previously contained offices, which are being demolished, as well as boardrooms and executive-dining quarters.

Sub-Zero Fridge

Plans and instructions for the bank’s contractors, on file with the city, specify the installation of at least one Sub-Zero Inc. refrigerator and icemaker in the renovated space, along with “premium grade” millwork and Madico Inc. “Safety Shield 800” blast-proof window film. The project encompasses 17 private offices, each with space for administrative assistants, as well as two conference rooms and open areas with “soft seating,” according to the plans.

Citigroup hired New York-based Conant Architects, whose Web site says it designed the bank’s offices in downtown and midtown Manhattan. The plans also list acoustical, telecommunications and lighting consultants, as well as engineers.

Lawmakers have criticized banks over the way they’re using TARP funds. Democrats led by House Financial Services Committee Chairman Barney Frank and Senate Banking Committee Chairman Christopher Dodd say more of the money should be going to consumer and small-business loans.

Liddy to Thain

American International Group Inc. CEO Edward Liddy was lambasted by lawmakers at a hearing in Washington yesterday for allowing the insurer to allocate $165 million for bonuses to employees after taking government loans.

President Barack Obama spoke out against inappropriate spending at banks on Jan. 23, following reports that former Merrill Lynch & Co. CEO John Thain incurred more than $1 million of expenses to redecorate his personal office at the New York- based securities firm after it was acquired by Bank of America Corp. Thain was ousted the same month.

Remember alleges

Time magazine is reporting that Treasury Secretary Tim Geithner may have misled Congress in his testimony about the AIG bonuses yesterday.

From Time:

Although Treasury Secretary Timothy Geithner told congressional leaders on Tuesday that he learned of AIG’s impending $160 million bonus payments to members of its troubled financial-products unit on March 10, sources tell TIME that the New York Federal Reserve informed Treasury staff that the payments were imminent on Feb. 28. That is 10 days before Treasury staffers say they first learned “full details” of the bonus plan, and three days before the Administration launched a new $30 billion infusion of cash for AIG.

“Treasury staff was informed about the new bonuses in a Feb. 28 memo that the March 15 [bonus-payment] date was upcoming,” a Federal Reserve source tells TIME. A Treasury Department source, speaking on background, confirmed the e-mail memo and its contents, saying, “Everybody knew that [AIG] had a retention issue.”

Of course, there’s already an innocent–or nearly innocent–explanation being put forward. You already know what it is: they’re pinning the blame on some low level staffer. Blame rolls downhill in Washington, DC, and the buck never stops at the top. In this case, people are saying that Geithner never got the message perhaps because he lacks the proper level of staffing.

This could be a hugely explosive issue. If Geithner did get the message–something that should be easily traceable by looking at Geithner’s emails–then we expect calls for his removal. But the Obama administration could well stymie any investigation into this by claiming that executive privilege protects Geithner’s emails from being examined by Congress.

Of course LEH was the ultimate idiot for their demise, evidenced by bankruptcy filings, but I would not doubt the stock could have been sold nekid {sic} despite legal locates.

Uh-oh, the ultimate stock market dark conspiracy — the shadowy cabal of naked short sellers — may have played a role in the collapse of Lehman Brothers last September. At least that’s what Bloomberg, not typically a venue for peddling crazy theories, has concluded.

As Lehman Brothers Holdings Inc. struggled to survive last year, as many as 32.8 million shares in the company were sold and not delivered to buyers on time as of Sept. 11, according to data compiled by the Securities and Exchange Commission and Bloomberg. That was a more than 57-fold increase over the prior year’s peak of 567,518 failed trades on July 30.

The SEC has linked such so-called fails-to-deliver to naked short selling, a strategy that can be used to manipulate markets. A fail-to-deliver is a trade that doesn’t settle within three days.

“We had another word for this in Brooklyn,” said Harvey Pitt, a former SEC chairman. “The word was ‘fraud.’” Read the whole thing >

According to their research, on two occasions, major failures to deliver shares coincided with with rumors of the company’s demise. In his testimony before the house. Dick Fuld blamed naked shorting and rumor mongering for the company’s bankruptcy — the result was that he got slammed for not being contrite enough.

I am thoroughly disgusted with all the games being played with tax payer money !

Who’s next to call a bottom? Anyone ? How about Dick Forked Tongue Bove ?

March 19 (Bloomberg) — Just about the only equities gaining in the worst start to a year for the global stock market since 1990 are emerging economies, from Shanghai to Santiago and Tunis to Taipei.

Of the 15 benchmark indexes that rose this year, only one is from a developed country, Sweden. China’s Shanghai Composite Index rallied 22 percent and Russia’s Micex Index rose 20 percent. The gains during the first global recession since World War II are a surprise because emerging markets suffered more than the U.S. and western Europe during past economic slowdowns, according to RidgeWorth Investments’ Alan Gayle.

“Historically we grouped all the emerging markets together and said they were more vulnerable to economic downturns,” said Gayle, a Richmond, Virginia-based senior investment strategist at RidgeWorth, which oversees about $60 billion. “This cycle has made apparent the differentiation within emerging markets. The relative growth story remains good in some of these countries.”

Investors flocked to China on forecasts its economy will grow 8 percent this year, while shares in Russia, Brazil and Chile climbed as prices for their oil, iron ore and copper rebounded after the worst drop in the Reuters/Jefferies CRB Index on record last year. The MSCI World Index was down 14 percent for the quarter through yesterday after paring a loss of as much as 25 percent this year.

‘Bear-Market Rally’

The MSCI World advanced 1.5 percent at 9:22 a.m. in London today on speculation the Federal Reserve’s plan to buy $300 billion of government bonds may end the recession. The MSCI Emerging Markets Index rose 1.9 percent.

The gains since March 9, driven by speculation that the worst of financial-company losses are over after the biggest U.S. banks said they were profitable in January and February following $1.2 trillion in writedowns worldwide, signal a “bear-market rally,” said Morgan Stanley Global Wealth Management’s David Darst.

“Don’t think that the winter is over,” said Darst, the New York-based company’s chief investment strategist. “This is a time maybe to take some profits.”

While the Shanghai index of shares listed in mainland China rose this year, the shares of those stocks traded in Hong Kong fell as international investors lost confidence in China’s earnings growth, and the economic expansion slowed.

Seven of the countries with rising stock indexes in 2009 — Colombia, Peru, Venezuela, Pakistan, Tunisia, Jamaica and Sri Lanka — have a total market capitalization under $100 billion, compared with $9.4 trillion in the U.S.

‘Bottoming Process’

“There may be momentary trading opportunities” in developing countries, said Frederic Dickson, who oversees $20 billion at D.A. Davidson & Co. in Lake Oswego, Oregon. Most markets will tend to “shadow the U.S. market, which seems to be going through a volatile bottoming process,” he said.

In Russia, the world’s largest energy exporter, the stock market surged this year as policy makers stabilized the ruble after it dropped 34 percent since June by raising interest rates, curbing bank refinancing and threatening to sell more foreign reserves.

Oil’s 7.9 percent rebound this year through yesterday helped drive the rally. Moscow-based OAO Lukoil, Russia’s second-biggest producer, gained 27 percent. Even after this year’s advance, the Micex is valued at 3.4 times its companies’ reported profits, the lowest level among major markets worldwide, Bloomberg data show.

China Stimulus Plan

“The best reason to go long Russia today is that it’s so cheap,” said James Beadle, the chief investment strategist at Pilgrim Asset Management Ltd. in Moscow. “I also believe there’s going to be a resurgence of some kind in the resource sector” as countries boost infrastructure spending, he said.

China’s Premier Wen Jiabao said this month that the government’s 4 trillion yuan ($585 billion) stimulus package will keep its 8 percent growth target for this year within reach, even after exports fell 26 percent in February.

Anhui Conch Cement Co., China’s largest producer, climbed 36 percent this year as New York-based Goldman Sachs Group Inc. and Frankfurt-based Deutsche Bank AG upgraded the shares, citing increased demand. Conch is based in Wuhu, Anhui province.

“Within emerging markets, we have China high up the list because of the policy effort,” said Michael Dicks, the London- based head of research and investment strategy at Barclays Wealth, which oversees about $203 billion.

Chile, Israel

Brazil’s Bovespa index climbed 6.9 percent as higher iron- ore imports from China sparked a 13 percent rally in Rio de Janeiro-based Cia. Vale do Rio Doce, the world’s biggest manufacturer. The country’s banking system is also boosting investor confidence after Brazilian lenders avoided the mortgage losses that dragged down bank shares across Europe and the U.S., according to Deutsche Bank analyst Mario Pierry.

The IPSA index in Chile, the world’s biggest copper maker, added 5.7 percent this year as prices for the metal rallied 33 percent and the central bank cut interest rates at the fastest pace in 15 years.

Israel’s TA-100 Index increased 7.6 percent after a natural- gas discovery off the coast of Haifa boosted shares of Petach Tikva-based Avner Oil & Gas Ltd. and Netanya-based Delek Group Ltd. by more than 120 percent. Taiwan’s Taiex index added 9.9 percent on higher sales forecasts for Taiwan Semiconductor Manufacturing Co. and Mediatek Inc. tied to stronger demand from China. Both companies are based in Hsinchu.

South Korea’s Kospi climbed 4 percent, helped by an improved profit outlook for Suwon-based Samsung Electronics Co.

Sweden’s OMX Stockholm 30 Index rose 0.1 percent as the nation’s weakening currency improved the earnings projections for exporters such as Stockholm-based Ericsson AB.

“There are early signs that a little bit more risk-taking is afoot,” said Mark Konyn, the Hong Kong-based chief executive officer of RCM Asia Pacific Ltd., which oversees $11 billion. “We’re starting to see at the margin a re-allocation to equities.”