FedEx Hit By High Oil Prices, Weak Economy
Futures are weaker due to poor commentary from a number of key players.
FedEx is the main story this morning, and it is not a pretty picture. Earnings of $1.45 was a bit shy of consensus of $1.47, but that wasn't the big problem. Guidance for the current quarter is well below expectations: $0.80-$1.00 vs. $1.27, as is the full year guidance of $4.75-$5.25 vs. $5.92 consensus.
"Record high fuel prices and the weak U.S. economy dampened volume growth and substantially affected our bottom line," CEO Frederick Smith said.
International continues to grow: 6 percent growth in International Priority, but that was offset by continuing declines in U.S. domestic express shipments.
FedEx down about 5 percent pre-open.
1) Morgan Stanley beat expectations ($0.95 vs. $0.92 expectations), but not by nearly as much as Goldman Sachs. There were declines in fixed income (85 percent below the levels for the same period last year), including a curious $120 million negative adjustment to marks previously taken in a trader's book that did not comply with Firm policies. Traders also noting that they had a sizeable gain ($1.43 b) from sale of two assets, ex-those one-time gains they had little in the way of earnings. Down 5 percent pre-open.
2) Fifth Third , one of the nation's largest regional banks, based in Cincinnati, is raising capital by issuing $1 B in convertible preferred shares. They are also reducing their quarterly dividend reduced to $0.15, down from prior $0.44. Kudos to BMO Capital Markets, who issued a report last Friday correctly predicting they would cut their dividend at least 50 percent and likely initiate a capital raise. Down 16 percent pre-open.
3) MF Global is down 15 percent pre-open, after warning that first quart revenues would come in below estimates; they will also be selling $150 m in preferred stock.
It wasn't all bad news:
--trucking giant YRC Worldwide affirmed its guidance for the quarter despite higher fuel costs; up 6 percent pre-open.
--General Mills raised its guidance, though they did not say why. Up 1 percent pre-open
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