FedEx Corp. said the U.S and global snowstorm forced it to cancel service in the New York City, Boston, Philadelphia, and New Jersey metropolitan areas, as well as Long Island.
FedEx CEO Fred Smith says that foreign oil dependency is the biggest threat to the American economy behind terrorism. In September 2008, he supported a plan to create a nationwide electrical energy grid to support the country's transportation system.
FedEx launches new, state-of-the-art tracking technologies available in 26 languages that allow customers to track deliveries on their computers and mobile devices.
In an obvious response to the slowing domestic economy, FedEx has decided to cut its 2009 marketing budget by 25%.
FedEx subsidiary "FedEx Trade Networks Inc." announced that it has opened two new distribution centers. These centers in Seattle and Oakland will provide customers with cargo service from Asia to America in one process.
UPS lowered their guidance and cited both soaring fuel costs and lowered domestic demand. The latter is especially worrying for shareholders of both companies; this suggests that cost increases will not be able to be passed to consumers.
FDX posted a loss of $241 after taking a $696 after-tax impairment charge from its ending the use of the Kinko's name. This was FedEx's first quarterly loss in eleven years. Excluding the charge, FedEx only missed earnings estimates by $0.02/share. However, guidance was lowered from $1.34/share to $0.80 to $1.00/share.
FedEx announced that it will cease its military charter business as it reviews non-core segments. The subcontractor of these charter flights, ATA Airlines, is suing FedEx for its abrupt cancellation of the service. The cancellation of the service caused ATA to immediately file for bankruptcy. ATA is seeking "tens of millions" in damages.
FedEx announced is discontinuing of the Kinko's name. It also said that it will write down $891 million of the goodwill paid for the store chain. This will amount in a $2.22 per share loss of book value.
In a surprising move, FedEx lowered guidance by nearly $0.20 a share because of higher oil prices.
Reuters reported that the U.S. Internal Revenue Service (IRS) found that FedEx Ground independent contractors should be reclassified as employees for tax purposes and that the Company faced related taxes and penalties of more than $319 million for 2002. The IRS is auditing similar issues for 2004 through 2006, the Company announced in the filing with the U.S. Securities and Exchange Commission.
FedEx Corporation lowered its earnings for the second quarter of 2008 and fiscal 2008. Earnings for the second quarter of 2008 are now expected to be in the range of $1.45 to $1.55 per diluted share, compared to the previous forecast of $1.60 to $1.75. For fiscal 2008, the Company now expects earnings of $6.40 to $6.70, compared to the previous forecast of $6.70 to $7.10. The Company cited increased fuel costs and less-than-truckload freight trends in the FedEx Freight segment as the primary reasons for the negative forecast.
FedEx stock dropped more than 3% in 3 days after UPS announced that it might cancel an existing order for a new Airbus airplanes. FedEx had recently canceled a similar order.
Share price climbed 13% after FedEx announced strong revenue growth for the first quarter of it's fiscal year. In the same week, the Dow Jones Industrial average dropped 100 points in one upon reports that Hurricane Rita would strike areas still devastated by the effects of Hurricane Katrina.
Share price fell 11% in one month despite the record revenues and profits that FedEx announced in the same month. Analysts attributed to projections that oil prices would rise sharply to $60 per barrel in the comming summer.